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What changed in YORK WATER CO's 10-K — 2022 vs 2023

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

+125 added−124 removedSource: 10-K (2024-03-05) vs 10-K (2023-03-07)

Top changes in YORK WATER CO's 2023 10-K

125 paragraphs added · 124 removed · 100 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

17 edited+4 added−0 removed33 unchanged
Biggest changeSince 1980, the DEP has required any new dam to have a spillway that is capable of passing the design flood without overtopping the dam. The design flood is either the Probable Maximum Flood, or PMF, or some fraction of it, depending on the size and location of the dam.
Biggest changeThe design flood is either the Probable Maximum Flood, or PMF, or some fraction of it, depending on the size and location of the dam. PMF is very conservative and is calculated using the most severe combination of meteorological and hydrologic conditions reasonably possible in the watershed area of a dam.
The Company obtains the bulk of its water supply for its primary system for York and Adams Counties from both the South Branch and East Branch of the Codorus Creek, which together have an average daily flow of 73.0 million gallons from a combined watershed area of approximately 117 square miles.
The Company obtains the bulk of its water supply for its primary system for York and Adams Counties from both the South Branch and East Branch of the Codorus Creek, which together have an average daily flow of approximately 73.0 million gallons from a combined watershed area of approximately 117 square miles.
Regulations issued under the Act, and its amendments, set standards on the amount of certain contaminants allowable in drinking water. Current requirements are not expected to have a material impact on the Company’s operations or financial condition as it already meets or exceeds standards.
Regulations issued under this Act, and its amendments, set standards on the amount of certain contaminants allowable in drinking water. Current requirements are not expected to have a material impact on the Company’s operations or financial condition as it already meets or exceeds standards.
The Company’s service territory had an estimated population of 208,000 as of December 31, 2022. Industry within the Company’s service territory is diversified, manufacturing such items as fixtures and furniture, electrical machinery, food products, paper, ordnance units, textile products, air conditioning systems, laundry detergent, barbells, and motorcycles.
The Company’s service territory had an estimated population of 209,000 as of December 31, 2023. Industry within the Company’s service territory is diversified, manufacturing such items as fixtures and furniture, electrical machinery, food products, paper, ordnance units, textile products, air conditioning systems, laundry detergent, barbells, and motorcycles.
The growth in the number of customers is due primarily to the acquisition of water and wastewater systems and organic growth. During the year ended December 31, 2022, the Company increased its number of customers from 73,144 to 76,731. See “Management’s Discussion and Analysis – Acquisitions and Growth” for a discussion of the Company’s recent acquisitions.
The growth in the number of customers is due primarily to the acquisition of water and wastewater systems and organic growth. During the year ended December 31, 2023, the Company increased its number of customers from 76,731 to 77,893. See “Management’s Discussion and Analysis – Acquisitions and Growth” for a discussion of the Company’s recent acquisitions.
The Company also owns and operates three wastewater collection systems and eight wastewater collection and treatment systems. The Company operates within its franchised water and wastewater territory, which covers portions of 54 municipalities within three counties in south-central Pennsylvania.
The Company also owns and operates three wastewater collection systems and ten wastewater collection and treatment systems. The Company operates within its franchised water and wastewater territory, which covers portions of 56 municipalities within four counties in south-central Pennsylvania.
Information about Our Executive Officers The Company presently has 116 employees, all of which are full time employees including the officers detailed in the information set forth under the caption “Executive Officers of the Company” of the 2023 Proxy Statement incorporated herein by reference.
Information about Our Executive Officers The Company presently has 130 employees, all but one of which are full time employees including the officers detailed in the information set forth under the caption “Executive Officers of the Company” of the 2024 Proxy Statement incorporated herein by reference.
In 2022, operating revenue was derived from the following sources and in the following percentages: residential, 65%; commercial and industrial, 27%; and other, 8%, which is primarily from the provision for fire service but includes other water and wastewater service-related income. See “Management’s Discussion and Analysis – Rate Matters” for a discussion of the Company’s rate case management.
In 2023, operating revenue was derived from the following sources and in the following percentages: residential, 64%; commercial and industrial, 29%; and other, 7%, which is primarily from the provision for fire service but includes other water and wastewater service-related income. See “Management’s Discussion and Analysis – Rate Matters” for a discussion of the Company’s rate case management.
The Company continues to grow its water distribution and wastewater collection systems to provide reliable service to its expanding franchised service territory and the increasing population within that territory.
Table of Contents Page 6 The Company continues to grow its water distribution and wastewater collection systems to provide reliable service to its expanding franchised service territory and the increasing population within that territory.
The Company also owns eleven wells which are capable of providing a safe yield of approximately 637,000 gallons per day to supply water to the customers of its groundwater satellite systems in York and Adams Counties. As of December 31, 2022, the Company’s average daily availability was 40.8 million gallons, and average daily consumption was approximately 21.1 million gallons.
The Company also owns thirteen wells which are capable of providing a safe yield of approximately 808,000 gallons per day to supply water to the customers of its groundwater satellite systems in York, Adams, and Lancaster Counties. As of December 31, 2023, the Company’s average daily availability was 41.0 million gallons, and average daily consumption was approximately 21.8 million gallons.
Houck The York Water Company (717) 718-2942 Investor Relations & 130 East Market Street (800) 750-5561 Communications Administrator York, PA 17401 mollyh@yorkwater.com Item 1A. Risk Factors. Not applicable.
Houck The York Water Company (717) 718-2942 Investor Relations & 130 East Market Street (800) 750-5561 Communications Administrator York, PA 17401 mollyh@yorkwater.com Item 1A. Risk Factors. Not applicable. Item 1B. Unresolved Staff Comments. None. Table of Contents Page 7
During the year ended December 31, 2022, the Company acquired an additional 114,100 feet of wastewater collection mains resulting in 94 miles of wastewater mains as of December 31, 2022. Table of Contents Page 6 The Company’s growth in revenues is primarily a result of customer growth and increases in water and wastewater rates.
During the year ended December 31, 2023, the Company acquired an additional 16,400 feet of wastewater collection mains resulting in 102 miles of wastewater mains as of December 31, 2023. The Company’s growth in revenues is primarily a result of customer growth and increases in water and wastewater rates.
The Company completed the final design and the permitting process to armor and replace the spillway of the Lake Williams dam and began construction in 2022 at a total cost of approximately $39 million. The Lake Redman dam will be reviewed following the completion of the work on the Lake Williams dam.
The Company completed the final design and the permitting process to armor the dam and replace the spillway of the Lake Williams dam and began construction in 2022. The Company completed the dam armoring and spillway replacement in 2023 at a total cost of approximately $40 million.
During the year ended December 31, 2022, the Company installed an additional 97,800 feet of water distribution mains and acquired an additional 235,200 feet of water distribution mains resulting in 1,065 miles of water mains as of December 31, 2022.
During the year ended December 31, 2023, the Company installed an additional 41,300 feet of water distribution mains and acquired an additional 16,300 feet of water distribution mains resulting in 1,076 miles of water mains as of December 31, 2023.
During the year ended December 31, 2022, the Company recognized revenue of $60,061, an increase of $4,942, or 9.0%, as compared to $55,119 during the year ended December 31, 2021.
During the year ended December 31, 2023, the Company recognized revenue of $71,031, an increase of $10,970, or 18.3%, as compared to $60,061 during the year ended December 31, 2022.
PMF is very conservative and is calculated using the most severe combination of meteorological and hydrologic conditions reasonably possible in the watershed area of a dam. The Company engaged a professional engineer to analyze the spillway capacities at the Lake Williams and Lake Redman dams and validate the DEP’s recommended flood design for the dams.
The Company engaged a professional engineer to analyze the spillway capacities at the Lake Williams and Lake Redman dams and validate the DEP’s recommended flood design for the dams.
The Company routinely inspects its dams and prepares annual reports of their condition as required by DEP regulations. The DEP reviews these reports and inspects the Company’s dams. The DEP most recently inspected some of the Company’s dams in 2022.
The Company routinely inspects its dams and prepares annual reports of their condition as required by DEP regulations. The DEP reviews these reports and inspects the Company’s dams. Since 1980, the DEP has required any new dam to have a spillway that is capable of passing the design flood without overtopping the dam.
Added
The EPA has published the Lead and Copper Rule Revisions, or LCRR, that includes a requirement to submit a service line inventory and a lead service line replacement plan to the respective states or agencies by October 16, 2024, as well as provide public education and sampling at elementary schools and childcare facilities.
Added
Additionally, the EPA is developing a new regulation, the Lead and Copper Rule Improvements, or LCRI, to better protect communities from exposure to lead in drinking water. The LCRI is expected to delay the due dates for lead service line replacement plans and result in modifications to other parts of the LCRR.
Added
The Company is executing an implementation plan to comply with the initial LCRR requirement to complete a lead service line inventory and begin additional sampling.
Added
Additional capital expenditures will be incurred in 2024 to complete the sitework around the dam and reservoir. The Lake Redman dam will be reviewed following the completion of the work on the Lake Williams dam.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeUnder the agreement, York County has agreed not to erect a dam upstream on the East Branch of the Codorus Creek or otherwise obstruct the flow of the creek.
Biggest changeUnder the agreement, York County has agreed not to erect a dam upstream on the East Branch of the Codorus Creek or otherwise obstruct the flow of the creek. Item 3. Legal Proceedings. There are no material legal proceedings involving the Company.
Table of Contents Page 8 The Company also operates a water filtration plant in Greene Township, Franklin County. Water at this plant is filtered through filters having a rated capacity of 1.16 MGD.
Table of Contents Page 10 The Company also operates a water filtration plant in Greene Township, Franklin County. Water at this plant is filtered through filters having a rated capacity of 1.16 MGD.
The wastewater treatment plants range from small extended aeration package plants to three larger facilities that utilize Biological Nutrient Removal/tertiary treatment technology, and have a combined permitted flow capacity of 772,500 gallons. With a projected maximum daily demand of 314,000 gallons, the plants’ flow paths offer both capacity and operational redundancy for maintenance, high flow events, and potential growth.
The wastewater treatment plants range from small extended aeration package plants to three larger facilities that utilize Biological Nutrient Removal/tertiary treatment technology, and have a combined permitted flow capacity of 922,500 gallons. With a projected maximum daily demand of 389,000 gallons, the plants’ flow paths offer both capacity and operational redundancy for maintenance, high flow events, and potential growth.
The eleven wastewater collection systems of the Company have approximately 94 miles of gravity collection mains and pressure force mains along with redundant sewage pumping stations. Other Properties The Company’s distribution center and material and supplies warehouse are located in Springettsbury Township and are composed of three one-story concrete block buildings aggregating 30,680 square feet.
The thirteen wastewater collection systems of the Company have approximately 102 miles of gravity collection mains and pressure force mains along with redundant sewage pumping stations. Other Properties The Company’s distribution center and material and supplies warehouse are located in Springettsbury Township and are composed of three one-story concrete block buildings aggregating 30,680 square feet.
Distribution and Collection The distribution systems of the Company have approximately 1,065 miles of water main lines which range in diameter from 2 inches to 36 inches. The distribution systems include booster stations and standpipes and reservoirs capable of storing approximately 59.4 million gallons of potable water.
Distribution and Collection The distribution systems of the Company have approximately 1,076 miles of water main lines which range in diameter from 2 inches to 36 inches. The distribution systems include booster stations and standpipes and reservoirs capable of storing approximately 59.7 million gallons of potable water.
Based on a total average daily consumption in 2022 of approximately 21.1 million gallons, the Company believes the water pumping and filtering facilities are adequate to meet present and anticipated demands. The Company has eight wastewater treatment facilities located in three counties within south-central Pennsylvania.
Based on a total average daily consumption in 2023 of approximately 21.8 million gallons, the Company believes the water pumping and filtering facilities are adequate to meet present and anticipated demands. The Company has ten wastewater treatment facilities located in four counties within south-central Pennsylvania.
The Company also owns satellite groundwater systems in York and Adams Counties. The systems consist of eleven wells capable of providing a combined safe yield of approximately 637,000 gallons per day. As of December 31, 2022, the Company’s present average daily availability was 40.8 million gallons, and daily consumption was approximately 21.1 million gallons.
The Company also owns satellite groundwater systems in York, Adams, and Lancaster Counties. The systems consist of thirteen wells capable of providing a combined safe yield of approximately 808,000 gallons per day. As of December 31, 2023, the Company’s present average daily availability was 41.0 million gallons, and daily consumption was approximately 21.8 million gallons.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information The common stock of The York Water Company is traded on the NASDAQ Global Select Market under the symbol YORW. Shareholders of record (excluding individual participants in securities positions listings) as of December 31, 2022 numbered approximately 1,890.
Biggest changeItem 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information The common stock of The York Water Company is traded on the NASDAQ Global Select Market under the symbol YORW. Shareholders of record (excluding individual participants in securities positions listings) as of December 31, 2023 numbered approximately 1,824.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item with respect to securities authorized for issuance under equity compensation plans is set forth in Part III, Item 12 of this Annual Report. Purchases of Equity Securities by the Company The Company did not repurchase any of its securities during the fourth quarter of 2022.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item with respect to securities authorized for issuance under equity compensation plans is set forth in Part III, Item 12 of this Annual Report. Purchases of Equity Securities by the Company The Company did not repurchase any of its securities during the fourth quarter of 2023.

Item 7. Management's Discussion & Analysis

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

74 edited+21 added−24 removed33 unchanged
Biggest changeCompletion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second half of 2023 at which time the Company will add approximately 280 wastewater customers. On June 9, 2022, the Company signed an agreement to purchase the wastewater collection and treatment assets of MESCO, Inc. in Monaghan Township, York County, Pennsylvania.
Biggest changeOn February 7, 2024, the Company signed an agreement to purchase the wastewater collection assets of Margaretta Mobile Home Park in Lower Windsor Township, York County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in 2025 at which time the Company will add approximately 65 wastewater customers.
In 2021, the Company adopted the MP-2021 mortality improvement scale, which slightly increased the life expectancy of pension plan participants, resulting in a slight increase to the pension benefit obligation, and ultimately, a decrease in the Company’s funded status of the plans. The Company selected its December 31, 2022 and 2021 discount rates based on the FTSE Pension Liability Index.
In 2021, the Company adopted the MP-2021 mortality improvement scale, which slightly increased the life expectancy of pension plan participants, resulting in a slight increase to the pension benefit obligation, and ultimately, a decrease in the Company’s funded status of the plans. The Company selected its December 31, 2023 and 2022 discount rates based on the FTSE Pension Liability Index.
Deferred income taxes for differences that are recognized for ratemaking purposes on a cash or flow-through basis were remeasured with offsetting changes to regulatory assets and liabilities on the balance sheet as of December 31, 2022.
Deferred income taxes for differences that are recognized for ratemaking purposes on a cash or flow-through basis were remeasured with offsetting changes to regulatory assets and liabilities on the balance sheet as of December 31, 2023 and 2022.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (All dollar amounts are stated in thousands of dollars.) Overview The York Water Company (the “Company”) is the oldest investor-owned water utility in the United States, operated continuously since 1816. The Company also owns and operates three wastewater collection systems and eight wastewater collection and treatment systems.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (All dollar amounts are stated in thousands of dollars.) Overview The York Water Company (the “Company”) is the oldest investor-owned water utility in the United States, operated continuously since 1816. The Company also owns and operates three wastewater collection systems and ten wastewater collection and treatment systems.
Approval is expected to be granted in 2023 at which time the Company will begin construction of a water main extension to a single point of interconnection and either supply a minimum agreed upon amount of water to the authority, receive a payment in lieu of water, or provide water during an emergency, at current tariff rates.
Approval is expected to be granted in 2024 at which time the Company will begin construction of a water main extension to a single point of interconnection and either supply a minimum agreed upon amount of water to the authority, receive a payment in lieu of water, or provide water during an emergency, at current tariff rates.
The Company intends to use primarily internally-generated funds for its anticipated 2023 and 2024 construction and fund the remainder through line of credit borrowings, potential debt and equity offerings, proceeds from its stock purchase plans and customer advances and contributions (see Note 1 to the Company’s financial statements included herein).
The Company intends to use primarily internally-generated funds for its anticipated 2024 and 2025 construction and fund the remainder through line of credit borrowings, potential debt and equity offerings, proceeds from its stock purchase plans and customer advances and contributions (see Note 1 to the Company’s financial statements included herein).
A debt to total capitalization ratio between forty-five and fifty percent has historically been acceptable to the PPUC in rate filings. See Note 6 to the Company’s financial statements included herein for the details of its long-term debt outstanding as of December 31, 2022.
A debt to total capitalization ratio between forty-five and fifty percent has historically been acceptable to the PPUC in rate filings. See Note 6 to the Company’s financial statements included herein for the details of its long-term debt outstanding as of December 31, 2023.
Customer advances and contributions are expected to account for between 5% and 10% of funding requirements in 2023 and 2024. The Company believes it will have adequate credit facilities and access to the capital markets, if necessary, during 2023 and 2024, to fund anticipated construction and acquisition expenditures.
Customer advances and contributions are expected to account for between 5% and 10% of funding requirements in 2024 and 2025. The Company believes it will have adequate credit facilities and access to the capital markets, if necessary, during 2024 and 2025, to fund anticipated construction and acquisition expenditures.
Table of Contents Page 13 Liquidity and Capital Resources Cash The Company manages its cash through a cash management account that is directly connected to its line of credit. Excess cash generated automatically pays down outstanding borrowings under the line of credit arrangement.
Table of Contents Page 15 Liquidity and Capital Resources Cash The Company manages its cash through a cash management account that is directly connected to its line of credit. Excess cash generated automatically pays down outstanding borrowings under the line of credit arrangement.
The Company used compensation increases of 2.5% to 3.0% in 2021 and 2022. The Company adopted a new mortality table in 2019, the Pri-2012, using the white collar table for the administrative and general plan and the blue collar table for the union plan.
The Company used compensation increases of 2.5% to 3.0% in 2022 and 2023. The Company adopted a new mortality table in 2019, the Pri-2012, using the white collar table for the administrative and general plan and the blue collar table for the union plan.
Possible impacts associated with a cyber security attack or other events may include remediation costs related to lost, stolen, or compromised data, repairs to data processing systems, increased cyber security protection costs, adverse effects on our compliance with regulatory and environmental laws and regulation, including standards for drinking water, litigation, and reputational damage.
Possible impacts associated with a cyber security attack or other events may include remediation costs related to lost, stolen, or compromised data, repairs to data processing systems, increased cyber security protection costs, adverse effects on the Company’s compliance with regulatory and environmental laws and regulation, including standards for drinking water, litigation, and reputational damage.
In 2023, the Company’s objectives are to continue to maximize its funds provided by operations and maintain a strong capital structure in order to be able to attract capital.
In 2024, the Company’s objectives are to continue to maximize its funds provided by operations and maintain a strong capital structure in order to be able to attract capital.
Table of Contents Page 14 The Company has the ability to issue approximately $4,000 of additional shares of its common stock or debt securities remaining under an effective “shelf” Registration Statement on Form S-3 on file with the Securities and Exchange Commission subject to market conditions at the time of any such offering.
The Company has the ability to issue approximately $4,000 of additional shares of its common stock or debt securities remaining under an effective “shelf” Registration Statement on Form S-3 on file with the Securities and Exchange Commission subject to market conditions at the time of any such offering.
The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period. The cost for the customer-owned lead service line replacements was approximately $1,518 and $1,351 through December 31, 2022 and 2021, respectively, and is included as a regulatory asset.
The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period. The cost for the customer-owned lead service line replacements was approximately $1,762 and $1,518 through December 31, 2023 and 2022, respectively, and is included as a regulatory asset.
The Company’s most critical accounting estimates include: revenue recognition and accounting for its pension plans. Revenue Recognition Operating revenues include amounts billed to metered water and certain wastewater customers on a cycle basis and unbilled amounts based on both actual and estimated usage from the latest meter reading to the end of the accounting period.
The Company’s most critical accounting estimates include: revenue recognition and accounting for its pension plans. Table of Contents Page 19 Revenue Recognition Operating revenues include amounts billed to metered water and certain wastewater customers on a cycle basis and unbilled amounts based on both actual and estimated usage from the latest meter reading to the end of the accounting period.
While the Company expects to maintain this dividend amount in 2023, future dividends will be dependent upon the Company’s earnings, financial condition, capital demands and other factors and will be determined by the Company’s Board of Directors. See Note 6 to the Company’s financial statements included herein for restrictions on dividend payments.
While the Company expects to maintain this dividend amount in 2024, future dividends will be dependent upon the Company’s earnings, financial condition, capital demands and other factors and will be determined by the Company’s Board. See Note 6 to the Company’s financial statements included herein for restrictions on dividend payments.
Table of Contents Page 17 Inflation The Company is affected by inflation, most notably by the continually increasing costs incurred to maintain and expand its service capacity. The cumulative effect of inflation results in significantly higher facility replacement costs which must be recovered from future cash flows.
Inflation The Company is affected by inflation, most notably by the continually increasing costs incurred to maintain and expand its service capacity. The cumulative effect of inflation results in significantly higher facility replacement costs which must be recovered from future cash flows.
The Company expects to continue to expense these asset improvements in the future. The Company’s effective tax rate will largely be determined by the level of eligible asset improvements expensed for tax purposes that would have been capitalized for tax purposes prior to the implementation of the TPR.
The Company expects to continue to expense these asset improvements in the future. The Company’s effective tax rate will largely be determined by income before income taxes and the level of eligible asset improvements expensed for tax purposes that would have been capitalized for tax purposes prior to the implementation of the TPR.
Internally-generated Funds The amount of internally-generated funds available for operations and construction depends on the Company’s ability to obtain timely and adequate rate relief, changes in regulations, customers’ water usage, weather conditions, customer growth and controlled expenses. In 2022, the Company generated $22,018 internally as compared to $22,959 in 2021.
Internally-generated Funds The amount of internally-generated funds available for operations and construction depends on the Company’s ability to obtain timely and adequate rate relief, changes in regulations, customers’ water usage, weather conditions, customer growth and controlled expenses. In 2023, the Company generated $31,908 internally as compared to $22,018 in 2022.
The Company seeks to grow revenues by increasing the volume of water sold through increases in the number of customers served, making timely and prudent investments in infrastructure replacements, expansion and improvements, and timely filing for rate increases.
The Company seeks to grow revenues by increasing the volume of water sold and wastewater service provided through increases in the number of customers, making timely and prudent investments in infrastructure replacements, expansion and improvements, and timely filing for rate increases.
Environmental Matters The Company was granted approval by the PPUC to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the agreement. The tariff modification allows the Company to replace customer-owned service lines at its own initial cost.
Table of Contents Page 18 Environmental Matters The Company was granted approval by the PPUC to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the date of the agreement. The tariff modification allows the Company to replace customer-owned service lines at its own initial cost.
Table of Contents Page 16 The Company relies on information technology systems in connection with the operation of the business, especially with respect to customer service, billing, accounting, and in some cases, the monitoring and operation of treatment, storage, and pumping facilities.
The Company relies on information technology systems in connection with the operation of the business, especially with respect to customer service, billing, accounting, and in some cases, the monitoring and operation of treatment, storage, and pumping facilities.
Accounts Receivable The accounts receivable balance tends to follow the change in revenues but is also affected by the timeliness of payments by customers and the level of the reserve for doubtful accounts. In 2022, higher revenue levels as compared to 2021 and a slight weakening in the timeliness of payments resulted in an increase in accounts receivable – customers.
Accounts Receivable The accounts receivable balance tends to follow the change in revenues but is also affected by the timeliness of payments by customers and the level of the reserve for doubtful accounts. In 2023, higher revenue levels as compared to 2022 resulted in an increase in accounts receivable – customers.
The present values of the Company’s future pension obligations were determined using a discount rate of 5.00% at December 31, 2022 and 2.65% at December 31, 2021. Adopting a new mortality table that represents a change in life expectancy and choosing a different discount rate normally changes the amount of pension expense and the corresponding liability.
The present values of the Company’s future pension obligations were determined using a discount rate of 4.75% at December 31, 2023 and 5.00% at December 31, 2022. Adopting a new mortality table that represents a change in life expectancy and choosing a different discount rate normally changes the amount of pension expense and the corresponding liability.
Table of Contents Page 18 The Company’s estimate of the expected return on plan assets is primarily based on the historic returns and projected future returns of the asset classes represented in its plans. The target allocation of pension assets is 50% to 70% equity securities, 30% to 50% fixed income securities, and 0% to 10% cash reserves.
The Company’s estimate of the expected return on plan assets is primarily based on the historic returns and projected future returns of the asset classes represented in its plans. The target allocation of pension assets is 70% to 90% fixed income securities, 10% to 30% equity securities, and 0% to 10% cash reserves.
As a result, under the accounting standards regarding rate-regulated activities, expense in excess of the Company’s pension plan contribution can be deferred as a regulatory asset and expensed as contributions are made to the plans and are recovered in customer rates. Therefore, these changes affect regulatory assets rather than pension expense.
As a result, under the accounting standards regarding rate-regulated activities, expense in excess of the Company’s pension plan contribution can be deferred as a regulatory asset and expensed as contributions are made to the plans and are recovered in customer rates. Therefore, these changes affect regulatory assets rather than pension expense. In 2023, the Company modified its investment policy statements.
In 2022, operating revenue was derived from the following sources and in the following percentages: residential, 65%; commercial and industrial, 27%; and other, 8%, which is primarily from the provision for fire service, but includes other water and wastewater service-related income. The diverse customer mix helps to reduce volatility in consumption.
In 2023, operating revenue was derived from the following sources and in the following percentages: residential, 64%; commercial and industrial, 29%; and other, 7%, which is primarily from the provision for fire service, but includes other water and wastewater service-related income. The diverse customer mix helps to reduce volatility in consumption.
Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second half of 2023 at which time the Company will add approximately 180 wastewater customers.
Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second half of 2024 at which time the Company will add approximately 100 water customers.
Table of Contents Page 15 Income Taxes, Deferred Income Taxes and Uncertain Tax Positions Under the Internal Revenue Service TPR, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return.
Income Taxes, Deferred Income Taxes and Uncertain Tax Positions Under the IRS TPR, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return.
The Company has remeasured the state portion of the Company’s deferred income taxes. The effect, net of the federal benefit, of $3 was recognized in income for the year ended December 31, 2022.
The Company has remeasured the state portion of the Company’s deferred income taxes. The effect, net of the federal benefit recognized in income for the years ended December 31, 2023 and 2022, was immaterial.
The Company also has a service line protection program on a targeted basis. The Company continues to review and consider opportunities to expand both initiatives to further diversify the business. In addition to increasing revenue, the Company consistently focuses on minimizing costs without sacrificing water quality or customer service.
The Company continues to review and consider opportunities to expand both initiatives to further diversify the business. In addition to increasing revenue, the Company consistently focuses on minimizing costs without sacrificing water quality or customer service.
See Notes 1, 4 and 5 to the Company’s financial statements included herein. The Company anticipates construction and acquisition expenditures for 2023 and 2024 of approximately $60,600 and $47,100, respectively, exclusive of any acquisitions not yet approved.
See Notes 1, 4 and 5 to the Company’s financial statements included herein. The Company anticipates construction and acquisition expenditures for 2024 and 2025 of approximately $42,200 and $46,100, respectively, exclusive of any acquisitions not yet approved.
The Company used 6.50% as its expected rate of return in 2021 and 2022. A decrease in the expected pension return would normally cause an increase in pension expense; however due to the aforementioned rate settlement, the Company’s expense would continue to be equal to its contributions to the plans. The change would instead be recorded in regulatory assets.
A decrease in the expected pension return would normally cause an increase in pension expense; however due to the aforementioned rate settlement, the Company’s expense would continue to be equal to its contributions to the plans. The change would instead be recorded in regulatory assets.
In addition to routine transmission and distribution projects, a portion of the anticipated 2023 and 2024 expenditures will be for additional main extensions, armoring and replacing the spillway of the Lake Williams dam, wastewater treatment plant construction, water treatment plant upgrades, and various replacements of infrastructure.
In addition to routine transmission and distribution projects, a portion of the anticipated 2024 and 2025 expenditures will be for additional main extensions, completion of armoring and replacing the spillway of the Lake Williams dam, wastewater treatment plant construction, an upgrade to the enterprise software system, and various replacements of infrastructure.
Capital Expenditures During 2022, the Company invested $50,532 in construction expenditures for routine items, armoring and replacing the spillway of the Lake Williams dam, and wastewater treatment plant construction as well as various replacements and improvements to infrastructure. In addition, the Company invested $3,388 in the acquisition of multiple water and wastewater systems.
Capital Expenditures During 2023, the Company invested $64,640 in construction expenditures for armoring and replacing the spillway of the Lake Williams dam, wastewater treatment plant construction as well as various replacements and improvements to infrastructure and routine items. In addition, the Company invested $625 in the acquisition of water and wastewater systems.
Closing is expected in the second half of 2023 at which time the Company will add approximately 30 commercial and industrial water and wastewater customers. In total, these acquisitions are expected to be immaterial to Company results.
Closing is expected in the second half of 2024 at which time the Company will add approximately 280 wastewater customers. In total, these acquisitions are expected to be immaterial to Company results.
The Company replaced approximately 61,000 feet of main in 2022. The Company was able to fund construction expenditures using internally-generated funds, line of credit borrowings, cash generated from the underwritten common stock offering, proceeds from its stock purchase plans and customer advances and contributions from developers, municipalities, customers, or builders.
The Company replaced approximately 50,200 feet of water main and 500 feet of wastewater main in 2023. The Company was able to fund construction expenditures using internally-generated funds, line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions from developers, municipalities, customers, or builders.
The Company does not use securitization of receivables or unconsolidated entities. For risk management purposes, the Company uses a derivative financial instrument, an interest rate swap agreement discussed in Note 7 to the financial statements included herein.
For risk management purposes, the Company uses a derivative financial instrument, an interest rate swap agreement discussed in Note 7 to the financial statements included herein.
As of December 31, 2022, the Company borrowed $29,740 under its line of credit and incurred a cash overdraft on its cash management account of $3,175, which was recorded in accounts payable.
As of December 31, 2023, the Company borrowed $30,273 under its line of credit and incurred a cash overdraft on its cash management account of $1,547, which was recorded in accounts payable.
The Company’s Board of Directors declared a dividend in the amount of $0.2027 per share at its February 2023 meeting. The dividend is payable on April 14, 2023 to shareholders of record as of February 28, 2023.
The Company’s Board declared a dividend in the amount of $0.2108 per share at its January 2024 meeting. The dividend is payable on April 15, 2024 to shareholders of record as of February 29, 2024.
During 2021, the Company’s dividend payout ratios relative to net income and net cash provided by operating activities were 58.3% and 42.7%, respectively. During the fourth quarter of 2022, the Board of Directors increased the dividend by 4.00% from $0.1949 per share to $0.2027 per share per quarter.
During 2022, the Company’s dividend payout ratios relative to net income and net cash provided by operating activities were 56.2% and 48.5%, respectively. During the fourth quarter of 2023, the Board increased the dividend by 4.00% from $0.2027 per share to $0.2108 per share per quarter.
The Company continuously looks for acquisition and expansion opportunities both within and outside its current service territory as well as through contractual services and bulk water supply. The Company’s wastewater business provides additional opportunities to expand. Table of Contents Page 10 The Company has entered into agreements with municipalities to provide billing and collection services.
The Company continuously looks for acquisition and expansion opportunities both within and outside its current service territory as well as through contractual services and bulk water supply. Table of Contents Page 12 The Company has entered into agreements with municipalities to provide billing and collection services. The Company also has a service line protection program on a targeted basis.
The Company had $29,740 in outstanding borrowings under its line of credit as of December 31, 2022. The interest rate on line of credit borrowings as of December 31, 2022 was 5.17%. In the third quarter of 2022, the Company renewed its committed line of credit and extended the maturity date to September 2024.
The Company had $30,273 in outstanding borrowings under its line of credit as of December 31, 2023. The interest rate on line of credit borrowings as of December 31, 2023 was 6.51%. In the third quarter of 2023, the Company renewed its committed line of credit and extended the maturity date to September 2025.
Management believes the Company will have adequate capacity under its current line of credit to meet financing needs throughout 2023. Long-term Debt The Company’s loan agreements contain various covenants and restrictions. Management believes it is currently in compliance with all of these restrictions. See Note 6 to the Company’s financial statements included herein for additional information regarding these restrictions.
Long-term Debt The Company’s loan agreements contain various covenants and restrictions. Management believes it is currently in compliance with all of these restrictions. See Note 6 to the Company’s financial statements included herein for additional information regarding these restrictions.
Credit Line Historically, the Company has borrowed under its lines of credit before refinancing with long-term debt or equity capital. As of December 31, 2022, the Company maintained an unsecured line of credit in the amount of $50,000 at an interest rate of LIBOR plus 1.05% with an unused commitment fee and an interest rate floor which matures September 2024.
Credit Line Historically, the Company has borrowed under its lines of credit before refinancing with long-term debt or equity capital. As of December 31, 2023, the Company maintained a $50,000, unsecured, committed line of credit at an interest rate of the Secured Overnight Financing Rate, or SOFR, plus 1.17% with an unused commitment fee and an interest rate floor.
As part of the renewal, the interest rate changed from LIBOR plus 1.05% to a successor rate of the Secured Overnight Financing Rate, or SOFR, plus 1.17% on January 1, 2023, in advance of the likely discontinuation of LIBOR in 2023. No other terms or conditions of the line of credit agreement were modified.
No other terms or conditions of the line of credit agreement were modified. On January 1, 2023, the interest rate changed from LIBOR plus 1.05% to a successor rate of the SOFR plus 1.17% in advance of the discontinuation of LIBOR in 2023. The Company expects to renew this line of credit as it matures under similar terms and conditions.
The Company experienced increased revenues in 2022 compared to 2021 primarily due to an increase in the number of customers and revenues from the distribution system improvement charge, or DSIC.
The Company experienced increased revenues in 2023 compared to 2022 primarily due to a rate increase effective March 1, 2023 and an increase in the number of customers, which was partially offset by lower revenues from the distribution system improvement charge, or DSIC.
On April 28, 2022, the Company signed an agreement to purchase the water assets and wastewater collection and treatment assets of Conewago Industrial Park Water & Sewer Company in Donegal Township, Lancaster County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.
On November 9, 2022, the Company signed an agreement to purchase the wastewater collection and treatment assets of CMV Sewage Co., Inc. in Chanceford Township, York County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.
The Company has seen an increase in its deferred income tax liability amounts primarily as a result of the accelerated depreciation deduction available for federal tax purposes which creates differences between book and tax depreciation expense. The Company expects this trend to continue as it makes significant investments in capital expenditures subject to accelerated depreciation or TPR.
Table of Contents Page 17 The Company has seen an increase in its deferred income tax liability amounts primarily as a result of the accelerated depreciation deduction available for federal tax purposes which creates differences between book and tax depreciation expense.
These measures are calculated on a regular basis and compared with historical information, budget and the other publicly-traded water and wastewater companies. The Company’s performance in 2022 was strong under the above measures. Operating revenues increased in 2022 compared to 2021 primarily due to an increase in the number of customers and revenues from the DSIC.
These measures are calculated on a regular basis and compared with historical information, budget and the other publicly-traded water and wastewater companies. The Company’s performance in 2023 was strong under the above measures.
Allowance for funds used during construction in 2023 is expected to increase based on a projected increase in the amount of eligible construction. Other income (expenses), net for 2022 reflects decreased expenses of $373 as compared to 2021. Lower retirement expenses of approximately $660 due mostly to an increase in the discount rate, were the primary reason for the decrease.
Allowance for funds used during construction in 2024 is expected to decrease based on the completion of the Lake Williams Dam project and a projected decrease in the amount of eligible construction. Other income (expenses), net for 2023 reflects increased expenses of $521 as compared to 2022. Higher retirement expenses of approximately $843 were the primary reason for the increase.
Lower earnings on life insurance policies of $145 and higher charitable contributions of $58 partially offset the decrease. Other expenses increased by a net of $84. In 2023, other income (expenses) will be largely determined by the change in market returns and discount rates for retirement programs and related assets.
Lower charitable contributions of approximately $288 partially offset the increase. Other expenses decreased by a net of $34. In 2024, other income (expenses) will be largely determined by the change in market returns and discount rates for retirement programs and related assets.
If the status of these factors deteriorates, the Company may incur additional expenses for uncollectible accounts and experience a reduction in its internally-generated funds.
Customer accounts are written off when collection efforts have been exhausted. If the status of the evaluated factors deteriorate, the Company may incur additional expenses for uncollectible accounts and experience a reduction in its internally-generated funds.
See Note 11 to the Company’s financial statements included herein for additional details regarding the pension plans. Off-Balance Sheet Transactions The Company does not use off-balance sheet transactions, arrangements or obligations that may have a material current or future effect on financial condition, results of operations, liquidity, capital expenditures, capital resources or significant components of revenues or expenses.
Table of Contents Page 20 Off-Balance Sheet Transactions The Company does not use off-balance sheet transactions, arrangements or obligations that may have a material current or future effect on financial condition, results of operations, liquidity, capital expenditures, capital resources or significant components of revenues or expenses. The Company does not use securitization of receivables or unconsolidated entities.
There is no guarantee that the Company will be able to obtain sufficient lines of credit with favorable terms in the future. If the Company is unable to obtain sufficient lines of credit or to refinance its line of credit borrowings with long-term debt or equity, when necessary, it may have to eliminate or postpone capital expenditures.
If the Company is unable to obtain sufficient lines of credit or to refinance its line of credit borrowings with long-term debt or equity, when necessary, it may have to eliminate or postpone capital expenditures. Management believes the Company will have adequate capacity under its current line of credit to meet financing needs throughout 2024.
Interest expense for 2023 is expected to be higher due to continued borrowings and expected increases in interest rates. Allowance for funds used during construction increased $280, from $1,221 in 2021 to $1,501 in 2022 due to a higher volume of eligible construction.
The weighted average interest rate on the lines of credit was 5.36% for 2023 and 2.11% for 2022. Interest expense for 2024 is expected to be higher due to continued borrowings and continued higher interest rates. Allowance for funds used during construction increased $2,652, from $1,501 in 2022 to $4,153 in 2023 due to a higher volume of eligible construction.
The return on year end common equity was strong but lower than the 2021 result of 11.1% and the five-year historical average of 11.0% due to an increase in common equity from an underwritten public stock offering completed in 2022.
The return on year end common equity was strong and higher than the 2022 result of 9.5% which included an increase in common equity from an underwritten public stock offering completed in 2022. The 2023 results were in line with the five year historical average return on year end common equity of 10.7%.
The efficiency ratio, which is calculated as net income divided by revenues, is used by management to evaluate its ability to control expenses. Over the five previous years, the Company’s ratio averaged 28.8%. In 2022, the ratio was higher than the average at 32.6% due primarily to lower income taxes than are included in the historical average.
The efficiency ratio, which is calculated as net income divided by revenues, is used by management to evaluate its ability to control expenses. Over the five previous years, the Company’s ratio averaged 30.0%.
The increase in operating revenues offset the increases in operating expenses. The Company incurred lower income taxes primarily due to a higher deduction for the tax benefit under the IRS TPR. The overall effect was an increase in net income in 2022 over 2021 of 15.3% and a return on year end common equity of 9.5%.
The Company incurred higher income taxes primarily due to higher income before income taxes. The overall effect was an increase in net income in 2023 over 2022 of 21.3% and a return on year end common equity of 10.7%.
The Company’s total long-term debt as a percentage of the total capitalization, defined as total common stockholders’ equity plus total long-term debt, was 40.7% as of December 31, 2022, compared with 49.4% as of December 31, 2021.
The Company’s total long-term debt as a percentage of the total capitalization, defined as total common stockholders’ equity plus total long-term debt, was 45.2% as of December 31, 2023, compared with 40.7% as of December 31, 2022. The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward.
In 2023, the Company expects depreciation expense to continue to rise due to additional investment in utility plant, and other expenses to increase as costs to treat water and wastewater, and to maintain and extend the distribution system, continue to rise. Interest on debt for 2022 increased $188 or 3.8%, from $4,926 for 2021 to $5,114 for 2022.
Other operating expenses increased by a net of $220. In 2024, the Company expects depreciation and amortization expense to continue to rise due to additional investment in utility plant, and other expenses to increase as costs to treat water and wastewater, and to maintain and extend the distribution system, continue to rise.
Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $1,700. This estimate is subject to adjustment as more facts become available. Dividends During 2022, the Company’s dividend payout ratios relative to net income and net cash provided by operating activities were 56.2% and 48.5%, respectively.
Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $1,900. This estimate is subject to adjustment as more facts become available.
The Company expects to renew this line of credit as it matures under similar terms and conditions. The Company has taken steps to manage the risk of reduced credit availability. It has established a committed line of credit with a 2-year revolving maturity that cannot be called on demand.
Table of Contents Page 16 The Company has taken steps to manage the risk of reduced credit availability. It has established a committed line of credit with a 2-year revolving maturity that cannot be called on demand. There is no guarantee that the Company will be able to obtain sufficient lines of credit with favorable terms in the future.
Based on the equity percentage falling to fifty percent, the Company completed the underwritten common stock offering, increasing equity as a percentage of total capitalization. The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward until it approaches fifty percent before considering additional equity.
The ratio decreased in 2023 due to higher debt primarily from increased capital expenditures. The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward until it approaches fifty percent before considering additional equity. It is the Company’s general intent to target equity between fifty and fifty-five percent of total capitalization.
The Company has determined there are no uncertain tax positions that require recognition as of December 31, 2022. See Note 14 to the Company’s financial statements included herein for additional details regarding income taxes. Credit Rating On August 9, 2022, Standard & Poor’s affirmed the Company’s credit rating at A-, with a stable outlook and adequate liquidity.
The Company expects this trend to continue as it makes significant investments in capital expenditures subject to accelerated depreciation or TPR. The Company has determined there are no uncertain tax positions that require recognition as of December 31, 2023. See Note 14 to the Company’s financial statements included herein for additional details regarding income taxes.
The increase was primarily due to an increase in interest rates and long-term debt outstanding. The average debt outstanding under the lines of credit was $13,428 for 2022 and $11,487 for 2021. The weighted average interest rate on the lines of credit was 2.11% for 2022 and 1.30% for 2021.
Drought conditions and weather patterns could further increase operating expenses. Interest on debt for 2023 increased $1,933, or 37.8%, from $5,114 for 2022 to $7,047 for 2023. The increase was primarily due to an increase in long-term debt outstanding and higher interest rates. The average debt outstanding under the lines of credit was $16,316 for 2023 and $13,428 for 2022.
The average number of wastewater customers served in 2022 increased as compared to 2021 by 2,284 customers, from 3,325 to 5,609 customers, primarily due to the West Manheim Township acquisition. The average number of water customers served in 2022 increased as compared to 2021 by 798 customers, from 69,622 to 70,420 customers.
Growth in the customer base also added to revenues. The average number of water customers served in 2023 increased as compared to 2022 by 996 customers, from 70,420 to 71,416 customers. The average number of wastewater customers served in 2023 increased as compared to 2022 by 390 customers, from 5,609 to 5,999 customers, primarily due to acquisitions.
Income taxes for 2022 decreased $1,105, or 98.7%, compared to 2021 primarily due to higher deductions from the IRS TPR. The Company’s effective tax rate was 0.1% for 2022 and 6.2% for 2021. The Company’s effective tax rate for 2023 will be largely determined by the level of eligible asset improvements expensed for tax purposes under TPR each period.
Income tax expense for 2023 increased $1,262 compared to 2022 primarily due to higher income before income taxes partially offset by higher deductions from the IRS TPR. The Company’s effective tax rate was 5.1% for 2023 and 0.1% for 2022.
Management is confident that its ratio will compare favorably to that of its peers. Management continues to look for ways to decrease expenses and increase efficiency as well as to file for rate increases promptly when needed.
Management continues to look for ways to decrease expenses and increase efficiency as well as to file for rate increases promptly when needed. 2023 Compared with 2022 Net income for 2023 was $23,757, an increase of $4,177, or 21.3%, from net income of $19,580 for 2022.
A reserve is maintained at a level considered adequate to provide for losses that can be reasonably anticipated based on inactive accounts with outstanding balances. Management periodically evaluates the adequacy of the reserve based on past experience, agings of the receivables, adverse situations that may affect a customer’s ability to pay, current economic conditions, and other relevant factors.
Expected credit losses are based on historical write-offs combined with an evaluation of current conditions and reasonable and supportable forecasts including inactive accounts with outstanding balances, the aging of balances in payment agreements, adverse situations that may affect a customer’s ability to pay, economic conditions, and other relevant factors applied to the current aging of receivables.
Table of Contents Page 11 2022 Compared with 2021 Net income for 2022 was $19,580, an increase of $2,596, or 15.3%, from net income of $16,984 for 2021. The primary contributing factors to the increase were higher operating revenues and lower income taxes, which were partially offset by higher expenses.
The primary contributing factors to the increase were higher operating revenues, which were partially offset by higher operating expenses and income taxes. Operating revenues for 2023 increased $10,970, or 18.3%, from $60,061 for 2022 to $71,031 for 2023. The primary reason for the increase was a rate increase effective March 1, 2023.
Table of Contents Page 12 Acquisitions and Growth See Note 2 to the Company’s financial statements included herein for a discussion of completed acquisitions included in financial results. On November 9, 2022, the Company signed an agreement to purchase the wastewater collection and treatment assets of CMV Sewage Co., Inc. in Chanceford Township, York County, Pennsylvania.
The Company does not expect to file a rate increase request in 2024. Acquisitions and Growth See Note 2 to the Company’s financial statements included herein for a discussion of completed acquisitions included in financial results.
Total per capita consumption for 2022 was approximately 1.2% higher than the same period of last year. The Company expects revenues for 2023 to increase due to an increase in rates effective March 1, 2023, and the continued increase in the number of water and wastewater customers from acquisitions and growth within the Company’s service territory.
In 2024, the Company expects revenues to show a modest increase over 2023 due to a full year at the new rates and an increase in the number of water and wastewater customers from acquisitions and growth within the Company’s service territory. Other regulatory actions, drought warnings or restrictions, weather patterns, and economic conditions could impact results.
The net proceeds were used to repay the Company’s borrowings under its line of credit agreement incurred to fund capital expenditures and acquisitions, and for general corporate purposes. Common stockholders’ equity as a percent of the total capitalization was 59.3% as of December 31, 2022, compared with 50.6% as of December 31, 2021.
The increase from 2022 was primarily due to the increase in net income and the increase in depreciation and amortization, a non-cash expense. Common Stock Common stockholders’ equity as a percent of the total capitalization was 54.8% as of December 31, 2023, compared with 59.3% as of December 31, 2022.
Removed
Impact of COVID-19 On March 11, 2020, the World Health Organization characterized an outbreak of a novel strain of coronavirus (“COVID-19”) as a pandemic. The Company has taken steps, consistent with directions from federal, state, and local authorities, to mitigate known risks with the health and safety of its employees and customers as its first priority.
Added
Operating revenues increased in 2023 compared to 2022 primarily due to a rate increase effective March 1, 2023 and an increase in the number of customers, which was partially offset by the lower revenues from the DSIC. The increase in operating revenues offset the increases in operating expenses.
Removed
The Company is an essential, life-sustaining business and has continued normal operations. Although most restrictions have been lifted, the Company continues to monitor guidance from federal, state, and local authorities. Any new restrictions are not expected to materially impede the Company’s ability to complete its planned capital expenditures or acquisitions. The Company has not experienced any material supply chain disruptions.
Added
In 2023, the ratio was higher than the average at 33.4% due primarily to the increase in operating revenues and lower income taxes than are included in the historical average. Management is confident that its ratio will compare favorably to that of its peers.
Removed
The Company has been informed of longer lead times for some items, although this does not impact daily operating supplies. The Company maintains an adequate inventory of critical repair parts which are available as needed.
Added
Total per capita consumption for 2023 was approximately 0.3% higher than last year. The increased revenues were partially offset by a $1,994 decrease from a lower DSIC allowed by the PPUC. The DSIC reset to zero on March 1, 2023 when the rate order took effect.

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