10q10k10q10k.net

What changed in YORK WATER CO's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of YORK WATER CO's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+120 added−125 removedSource: 10-K (2025-03-04) vs 10-K (2024-03-05)

Top changes in YORK WATER CO's 2024 10-K

120 paragraphs added · 125 removed · 106 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

15 edited+2 added−2 removed37 unchanged
Biggest changeThe 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.
Biggest changeThe EPA published the Lead and Copper Rule Revisions, or LCRR, that included 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.
The Company has two reservoirs on this primary system, Lake Williams and Lake Redman, which together hold up to approximately 2.2 billion gallons of water. The Company supplements these reservoirs with a 15-mile pipeline from the Susquehanna River to Lake Redman which provides access to an additional supply of 12.0 million gallons of untreated water per day.
The Company has two reservoirs on this primary system, Lake Williams and Lake Redman, which together hold up to approximately 2.5 billion gallons of water. The Company supplements these reservoirs with a 15-mile pipeline from the Susquehanna River to Lake Redman which provides access to an additional supply of 12.0 million gallons of untreated water per day.
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.
In 2024, 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.
If lead concentrations exceed an action level, the Company must undertake a number of additional actions to control corrosion, inform the public about steps they should take to protect their health and may be required to replace lead service lines under its control. The Company is currently in compliance with standards under the Lead and Copper Rule.
If lead concentrations exceed an action level, the Company must undertake additional actions to control corrosion, inform the public about steps they should take to protect their health and may be required to replace lead service lines under its control. The Company is currently in compliance with standards under the Lead and Copper Rule.
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 Company’s service territory had an estimated population of 212,000 as of December 31, 2024. 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.
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
Houck The York Water Company (717) 718-2942 Human Resources & 130 East Market Street (800) 750-5561 Investor Relations Coordinator York, PA 17401 mollyh@yorkwater.com Item 1A. Risk Factors. Not applicable. Item 1B. Unresolved Staff Comments. None. Table of Contents Page 7
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.
The Company also owns and operates three wastewater collection systems and eleven wastewater collection and treatment systems. The Company operates within its franchised water and wastewater territory, which covers portions of 57 municipalities within four counties in south-central Pennsylvania.
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 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, 2024, the Company increased its number of customers from 77,893 to 79,771. See “Management’s Discussion and Analysis – Acquisitions and Growth” for a discussion of the Company’s recent acquisitions.
The Company is not aware of any significant environmental remediation costs necessary from the handling and disposal of waste material from its wastewater operations. Table of Contents Page 5 Lead and copper may enter drinking water primarily through plumbing materials.
The Company is not aware of any significant environmental remediation costs necessary from the handling and disposal of waste material from its wastewater operations. Table of Contents Page 5 The primary avenue for lead and copper to enter drinking water is through plumbing materials.
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.
During the year ended December 31, 2024, the Company acquired an additional 26,200 feet of wastewater collection mains resulting in 131 miles of wastewater mains as of December 31, 2024. The Company’s growth in revenues is primarily a result of customer growth and increases in water and wastewater rates.
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.
The Company also owns fifteen wells which are capable of providing a safe yield of approximately 923,000 gallons per day to supply water to the customers of its groundwater satellite systems in York, Adams, and Lancaster Counties. As of December 31, 2024, the Company’s average daily availability was 41.1 million gallons, and average daily consumption was approximately 22.4 million gallons.
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.
Additional capital expenditures were incurred in 2024 and are expected to be completed in 2025 for sitework around the dam and reservoir. The Lake Redman dam will be reassessed following the completion of the work on the Lake Williams dam.
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.
Information about Our Executive Officers The Company presently has 127 employees including the officers detailed in the information set forth under the caption “Executive Officers of the Company” of the 2025 Proxy Statement incorporated herein by reference.
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, 2024, the Company installed an additional 97,400 feet of water distribution mains and acquired an additional 33,000 feet of water distribution mains resulting in 1,101 miles of water mains as of December 31, 2024.
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.
During the year ended December 31, 2024, the Company recognized revenue of $74,959, an increase of $3,928, or 5.5%, as compared to $71,031 during the year ended December 31, 2023.
Removed
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
Additionally, the EPA adopted a new regulation, the Lead and Copper Rule Improvements, or LCRI, to focus on the replacement of lead and certain galvanized steel service lines and ensure public education is provided along with sampling at elementary schools and childcare facilities by 2037.
Removed
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
The Company successfully submitted its service line inventory and is developing elementary school and childcare facility mailings in preparation for LCRI sampling compliance.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+5 added−0 removed15 unchanged
Biggest changeThis group of contractors includes a Chief Information Security Officer, Chief Technology Officer, Cybersecurity Analysts, Network Engineers, and Network Administrators. Monitor Cybersecurity Risks The cybersecurity team actively monitors for cybersecurity risks by employing the use of endpoint detection and response solutions with immediate alert notifications, vulnerability scanning solutions that proactively identify risks, and by monitoring the logs of network devices.
Biggest changeMonitor Cybersecurity Risks The cybersecurity team actively monitors for cybersecurity risks by employing the use of endpoint detection and response solutions with immediate alert notifications, vulnerability scanning solutions that proactively identify risks, and by monitoring the logs of network devices.
The breadth of experience in this Committee enables it to be the most appropriate lead in oversight of cybersecurity risks and capability. Table of Contents Page 8 Management Role The Chief Administrative Officer and General Counsel has primary oversight of the IT Department and the cybersecurity program, with a direct reporting relationship to the President and Chief Executive Officer.
The breadth of experience in this Committee enables it to be the most appropriate lead in oversight of cybersecurity risks and capability. Management Role The Chief Administrative Officer and General Counsel has primary oversight of the IT Department and the cybersecurity program, with a direct reporting relationship to the President and Chief Executive Officer.
Reporting to the Board The Chief Administrative Officer and General Counsel has primary responsibility to report to the President and Chief Executive Officer and to the Board and presents with the CIO where appropriate for the content of the presentation and/or to facilitate a substantive discussion.
Table of Contents Page 9 Reporting to the Board The Chief Administrative Officer and General Counsel has primary responsibility to report to the President and Chief Executive Officer and to the Board and presents with the CIO where appropriate for the content of the presentation and/or to facilitate a substantive discussion.
Material cybersecurity matters, and significant strategic risk management processes and decisions are elevated to the Board by the Chief Administrative Officer and General Counsel, ensuring that the Board has effective and substantive oversight and may provide input and guidance on critical cybersecurity measures and issues. Table of Contents Page 9
Material cybersecurity matters, and significant strategic risk management processes and decisions are elevated to the Board by the Chief Administrative Officer and General Counsel, ensuring that the Board has effective and substantive oversight and may provide input and guidance on critical cybersecurity measures and issues.
These briefings include both educational and program status information, including: • Current cybersecurity risks, including qualitative rating based upon underlying objective measures; • Status of ongoing cybersecurity initiatives and strategies; • Incident and response reports and lessons learned from any cybersecurity event; and • Compliance report with regulatory requirements and industry standards.
These briefings include both educational and program status information, including: • Current cybersecurity risks, including qualitative rating based upon underlying objective measures; • Status of ongoing cybersecurity initiatives and strategies; • Maintenance and testing of the IRP; • Incident and response reports and lessons learned from any cybersecurity incident(s); and • Compliance report with regulatory requirements and industry standards.
Identified Material Risks To date, the Company has not encountered cybersecurity challenges, risks, or breaches that have materially impaired its business strategy, operations, or its financial standing.
Table of Contents Page 8 Identified Material Risks To date, the Company has not encountered cybersecurity challenges, risks, or breaches that have materially impaired its business strategy, operations, or its financial standing.
Added
Incident Response Plan The Company maintains and tests its Incident Response Plan, or IRP, to appropriately document plans for identifying, prioritizing, containing, and communicating information related to an incident. The Company completes annual tabletop testing of its IRP, including a testing results review to identify opportunities for improvement.
Added
Risk Evaluation Water utilities face several cybersecurity risks due to their critical role in monitoring and controlling water treatment and distribution processes and servicing customers.
Added
The key risks the Company has evaluated that could adversely impact system confidentiality, integrity, and/or availability include: • Unauthorized Remote Access: Vulnerabilities in remote access points can be exploited by attackers to gain control over systems, potentially disrupting water services. • Malware and Ransomware: Malicious software can infiltrate systems, leading to operational disruptions, data breaches, or ransom demands.
Added
Cybercriminals can encrypt critical data and demand a ransom for its release, potentially disrupting water supply and treatment processes. • Insider Threats: Employees or contractors with access to systems might intentionally or unintentionally compromise security disrupting water supply and treatment processes or other utility services. • Denial of Service Attacks: Attackers can overwhelm systems with traffic, rendering them unavailable and disrupting water services. • Unsecured Human Machine Interfaces: Without proper security measures, human machine interfaces can be accessed by unauthorized users, allowing them to view and adjust real-time system settings. • Outdated Technology: Many systems use legacy technology that lack modern security features, making them more susceptible to attacks affecting water services. • Network Segmentation Issues: Poorly segmented networks can allow attackers to move laterally within the system, increasing the potential impact of an attack and impact to water services. • Phishing Scams: Employees might be targeted with deceptive emails to steal sensitive information or gain unauthorized access to systems resulting in unintentional loss of data.
Added
This group of contractors includes a Chief Information Security Officer, IT Director, Cybersecurity Analysts, Network Engineers, and Network Administrators. The CIO, Chief Information Security Officer, and IT Director all have a minimum of ten years of experience in the cybersecurity and technology leadership field.

Item 2. Properties

Properties — owned and leased real estate

10 edited+2 added−1 removed9 unchanged
Biggest changeDistribution 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.
Biggest changeWith a projected maximum daily demand of 439,734 gallons, the plants’ flow paths offer both capacity and operational redundancy for maintenance, high flow events, and potential growth. Distribution and Collection The distribution systems of the Company have approximately 1,101 miles of water main lines which range in diameter from 2 inches to 36 inches.
Treatment Facilities The Company’s primary water filtration plant is located in Spring Garden Township, York County, about one-half mile south of the City of York. Water at this plant is filtered through twelve dual media filters having a rated capacity of 39.0 MGD, with a maximum supply of 42.0 MGD for short periods if necessary.
Table of Contents Page 10 Treatment Facilities The Company’s primary water filtration plant is located in Spring Garden Township, York County, about one-half mile south of the City of York. Water at this plant is filtered through twelve dual media filters having a rated capacity of 39.0 MGD, with a maximum supply of 42.0 MGD for short periods if necessary.
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.
The fourteen wastewater collection systems of the Company have approximately 131 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.
Under 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.
Under 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. Table of Contents Page 11 Item 3. Legal Proceedings. There are no material legal proceedings involving the Company.
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.
The Company also owns satellite groundwater systems in York, Adams, and Lancaster Counties. The systems consist of fifteen wells capable of providing a combined safe yield of approximately 923,000 gallons per day. As of December 31, 2024, the Company’s present average daily availability was 41.1 million gallons, and daily consumption was approximately 22.4 million gallons.
All booster stations are equipped with at least two pumps for protection in case of mechanical failure. Following a deliberate study of customer demand and pumping capacity, the Company installed standby generators at all critical booster stations to provide an alternate energy source or emergency power in the event of an electric utility interruption.
Following a deliberate study of customer demand and pumping capacity, the Company installed standby generators at all critical booster stations to provide an alternate energy source or emergency power in the event of an electric utility interruption.
The upper dam, the Lake Redman Impounding Dam, creates a reservoir covering approximately 290 acres containing about 1.3 billion gallons of water. The Company supplements these reservoirs with a 15-mile pipeline from the Susquehanna River to Lake Redman which provides access to an additional supply of 12.0 million gallons per day, or MGD.
The Company supplements these reservoirs with a 15-mile pipeline from the Susquehanna River to Lake Redman which provides access to an additional supply of 12.0 million gallons per day, or MGD.
The Company owns two impounding dams on this primary system located in York and Springfield Townships adjoining the Borough of Jacobus to the south. The lower dam, the Lake Williams Impounding Dam, creates a reservoir covering approximately 165 acres containing about 870 million gallons of water.
The Company owns two impounding dams on this primary system located in York and Springfield Townships adjoining the Borough of Jacobus to the south.
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 Company has eleven wastewater treatment facilities located in four counties within south-central Pennsylvania. 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 1,222,500 gallons.
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 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. Based on a total average daily consumption in 2024 of approximately 22.4 million gallons, the Company believes the water pumping and filtering facilities are adequate to meet present and anticipated demands.
Removed
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.
Added
The lower dam, the Lake Williams Impounding Dam, creates a reservoir covering approximately 165 acres and the upper dam, the Lake Redman Impounding Dam, creates a reservoir covering approximately 290 acres, which together hold up to approximately 2.5 billion gallons of water.
Added
The distribution systems include booster stations and standpipes and reservoirs capable of storing approximately 58.7 million gallons of potable water. All booster stations are equipped with at least two pumps for protection in case of mechanical failure.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed0 unchanged
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.
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, 2024 numbered approximately 1,775.
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.
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 2024.

Item 7. Management's Discussion & Analysis

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

73 edited+5 added−16 removed39 unchanged
Biggest changeThe increase was primarily due to higher expenses of approximately $1,607 for depreciation and amortization, $975 for water treatment, $713 for wages, $683 for wastewater treatment as the prior year included a one-time reimbursement not repeated in the current year, $362 for insurance, $282 for distribution system maintenance, $281 for outside services, $213 for billing and revenue collection services, $202 for fuel to pump raw water from the Susquehanna River, $189 for reduced capitalized overhead, $106 for an increased allowance for uncollectible accounts, and $89 for source maintenance.
Biggest changeThe increase was primarily due to higher expenses of approximately $1,216 for depreciation and amortization, $1,007 for wages and benefits, $992 for distribution system maintenance, $534 for an increased allowance for uncollectible accounts, $504 for wastewater treatment, $268 for purchased power, $226 for insurance, $200 for outside services, $163 for water treatment, and $92 for billing and revenue 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 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 13 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.
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.
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, 2024, 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.
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.
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 eleven wastewater collection and treatment systems.
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.
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, 2024 and 2023 discount rates based on the FTSE Pension Liability Index.
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).
The Company intends to use primarily internally-generated funds for its anticipated 2025 and 2026 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).
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.
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 2025.
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.
In 2024, 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.
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.
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, 2024.
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.
While the Company expects to maintain this dividend amount in 2025, 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.
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.
Customer advances and contributions are expected to account for between 5% and 10% of funding requirements in 2025 and 2026. The Company believes it will have adequate credit facilities and access to the capital markets, if necessary, during 2025 and 2026, to fund anticipated construction and acquisition expenditures.
The Company has a substantial deferred income tax asset primarily due to the excess accumulated deferred income taxes on accelerated depreciation from the 2017 Tax Act and the differences between the book and tax balances of the customers’ advances for construction and contributions in aid of construction and deferred compensation plans.
The Company has a substantial deferred income tax asset primarily due to the excess accumulated deferred income taxes on accelerated depreciation from the Tax Cuts and Jobs Act of 2017 and the differences between the book and tax balances of the customers’ advances for construction and contributions in aid of construction, and deferred compensation plans.
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.
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, 2024 and 2023.
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.
The Company used compensation increases of 2.5% to 3.0% in 2023 and 2024. 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 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 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, 2024 and 2023, was immaterial.
The Company used 5.00% as its expected rate of return in 2023, a decrease from the 6.50% used in 2022 based on the modified investment policy statements.
The Company used 5.00% as its expected rate of return in 2023 and 2024, a decrease from the 6.50% used in 2022 based on the modified investment policy statements.
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.
In 2025, 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 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.
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.
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 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 $1,961 and $1,762 through December 31, 2024 and 2023, respectively, and is included as a regulatory asset.
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.
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.
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 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 31.1%.
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.
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 2024, the Company generated $30,559 internally as compared to $31,908 in 2023.
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.
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 47.4% as of December 31, 2024, compared with 45.2% as of December 31, 2023. The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward.
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.
Table of Contents Page 16 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 2024, higher revenue levels as compared to 2023 resulted in an increase in accounts receivable – customers.
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.
Capital Expenditures During 2024, the Company invested $48,226 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 $783 in the acquisition of water and wastewater systems.
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.
Table of Contents Page 15 On June 27, 2024, 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 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 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’s effective tax rate for 2024 will be largely determined by income before income taxes and the level of eligible asset improvements expensed for tax purposes under TPR each period. Rate Matters See Note 10 to the Company’s financial statements included herein for a discussion of its rate matters.
The Company’s effective tax rate was 6.2% for 2024 and 5.1% for 2023. The Company’s effective tax rate for 2025 will be largely determined by the level of eligible asset improvements expensed for tax purposes under the IRS TPR each period. Rate Matters See Note 10 to the Company’s financial statements included herein for a discussion of its rate matters.
The Company received net proceeds, after deducting issuance costs, of approximately $39,829. The net proceeds were used to refinance line of credit borrowings incurred by the Company as interim financing for various capital projects of the Company.
The senior notes are unsecured and unsubordinated obligations of the Company. The Company received net proceeds, after deducting issuance costs, of approximately $39,833. The net proceeds were used to refinance line of credit borrowings incurred by the Company as interim financing for various capital projects of the Company.
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 replaced approximately 50,200 feet of water main in 2024. 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. See Notes 1, 4 and 5 to the Company’s financial statements included herein.
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.
In addition to routine transmission and distribution projects, a portion of the anticipated 2025 and 2026 expenditures will be for additional main extensions, water tank replacement, wastewater treatment plant construction, an upgrade to the enterprise software system, and various replacements of infrastructure.
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.
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.
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.
The Company experienced increased revenues in 2024 compared to 2023 primarily due to the residual effects of a rate increase effective March 1, 2023, an increase in the number of customers, and higher revenues from the distribution system improvement charge, or DSIC.
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.
As of December 31, 2024, the Company borrowed $15,808 under its line of credit and incurred a cash overdraft on its cash management account of $2,428, which was recorded in accounts payable.
On 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.
Closing is expected in the second half of 2025 at which time the Company will add approximately 280 wastewater customers. On 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.
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.
In 2025, 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. Weather patterns could further increase operating expenses.
If there are no outstanding borrowings, the cash is used as an earnings credit to reduce banking fees. Likewise, if additional funds are needed beyond what is generated internally for payroll, to pay suppliers, to fund capital expenditures, or to pay debt service, funds are automatically borrowed under the line of credit.
Likewise, if additional funds are needed beyond what is generated internally for payroll, to pay suppliers, to fund capital expenditures, or to pay debt service, funds are automatically borrowed under the line of credit.
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 an effective “shelf” Registration Statement on Form S-3 on file with the Securities and Exchange Commission, pursuant to which the Company may offer an aggregate remaining amount of up to $60,000 of its common stock or debt securities subject to market conditions at the time of any such offering.
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.
The Company had $15,808 in outstanding borrowings under its line of credit as of December 31, 2024. The interest rate on line of credit borrowings as of December 31, 2024 was 5.72%. In the third quarter of 2024, the Company renewed its committed line of credit and extended the maturity date to September 2026.
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 the fourth quarter of 2024, the Board increased the dividend by 4.00% from $0.2108 per share to $0.2192 per share per quarter. The Company’s Board declared a dividend in the amount of $0.2192 per share at its January 2025 meeting. The dividend is payable on April 15, 2025 to shareholders of record as of February 28, 2025.
On February 24, 2023, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $40,000 aggregate principal amount of the Company’s senior notes. The senior notes bear interest at 5.50% per annum payable semiannually and mature on February 24, 2053. The senior notes are unsecured and unsubordinated obligations of the Company.
Table of Contents Page 17 On February 27, 2024, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $40,000 aggregate principal amount of the Company’s senior notes. The senior notes bear interest at 5.67% per annum payable semiannually and mature on February 27, 2054.
Based on historical experience, the Company believes its estimate of unbilled revenues is reasonable. Pension Accounting Accounting for defined benefit pension plans requires estimates of future compensation increases, mortality, the discount rate, and expected return on plan assets as well as other variables. These variables are reviewed annually with the Company’s pension actuary.
The Company’s most critical accounting estimates include: revenue recognition and accounting for its pension plans. Pension Accounting Accounting for defined benefit pension plans requires estimates of future compensation increases, mortality, the discount rate, and expected return on plan assets as well as other variables. These variables are reviewed annually with the Company’s pension actuary.
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.
Management continues to look for ways to decrease expenses and increase efficiency as well as to file for rate increases promptly when needed. 2024 Compared with 2023 Net income for 2024 was $20,325, a decrease of $3,432, or 14.4%, from net income of $23,757 for the same period of 2023.
The Company is also pursuing other bulk water contracts and acquisitions in and around its service territory to help offset any potential declines in per capita water consumption and to grow its business. On May 10, 2017, the Company signed an emergency interconnect agreement with Dallastown-Yoe Water Authority.
The Company is also pursuing other bulk water contracts and acquisitions in and around its service territory to help offset any potential declines in per capita water consumption and to grow its business.
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.
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. If there are no outstanding borrowings, the cash is used as an earnings credit to reduce banking fees.
Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second quarter of 2024 at which time the Company will add approximately 15 water customers. On March 27, 2023, the Company signed an agreement to purchase the water assets of Pine Run Retirement Community in Hamilton Township, Adams County, Pennsylvania.
On January 24, 2025, the Company signed an agreement to purchase the water assets of Eagle View Manufactured Housing Community in Berwick Township, Adams County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second half of 2025 at which time the Company will add approximately 140 water 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.
Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second half of 2025 at which time the Company will add approximately 65 wastewater customers. In total, these acquisitions are expected to be immaterial to Company results.
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.
Effective January 1, 2025, the Company’s tariff included a DSIC on revenues of 2.20%. The Company expects to file a rate increase request in 2025. Acquisitions and Growth See Note 2 to the Company’s financial statements included herein for a discussion of completed acquisitions included in financial results.
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.
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.
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 Company has determined there are no uncertain tax positions that require recognition as of December 31, 2024. See Note 14 to the Company’s financial statements included herein for additional details regarding income taxes.
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 weighted average interest rate on the line of credit was 5.23% during 2024 and 5.36% during 2023. Interest expense for 2025 is expected to increase due to the increase in long-term debt outstanding. Allowance for funds used during construction decreased $2,101, from $4,153 in 2023 to $2,052 in 2024 due to a higher volume of eligible construction in 2023.
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.
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.
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.
Additional statistical measures including number of customers, customer complaint rate, annual customer rates and the efficiency ratio are used to evaluate performance quality. 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 2024 was strong under the above measures.
Credit Rating On July 26, 2023, Standard & Poor’s affirmed the Company’s credit rating at A-, with a stable outlook and adequate liquidity.
Table of Contents Page 18 Credit Rating On August 6, 2024, Standard & Poor’s affirmed the Company’s credit rating at A-, with a stable outlook and adequate liquidity.
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.
Operating revenues increased in 2024 compared to 2023 primarily due to the residual effects of a rate increase effective March 1, 2023, an increase in the number of customers, and higher revenues from the DSIC. The increase in operating expenses offset the increase in operating revenues. The Company incurred higher interest expense and lower allowance for funds used during construction.
In the case of the Company, these items change its liability, but do not have an impact on its pension expense. The PPUC, in a previous rate settlement, agreed to grant recovery of the Company’s contribution to the pension plans in customer rates.
The PPUC, in a previous rate settlement, agreed to grant recovery of the Company’s contribution to the pension plans in customer rates.
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.
In 2024, the ratio was lower than the average at 27.1% due primarily to the increase in operating expenses, higher interest expense, and lower allowance for funds used during construction. Management is confident that its ratio will compare favorably to that of its peers.
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.
Interest on debt for 2024 increased $1,857, or 26.4%, from $7,047 for 2023 to $8,904 for 2024. The increase was primarily due to an increase in long-term debt outstanding and higher interest rates upon issuance of the 5.67% Senior Notes. The average debt outstanding under the line of credit was $10,087 in 2024 and $16,316 in 2023.
These measures could potentially impact future revenues, operating expenses, and net income depending on the length and severity of the dry conditions. Dividends During 2023, the Company’s dividend payout ratios relative to net income and net cash provided by operating activities were 49.3% and 36.3%, respectively.
Dividends During 2024, the Company’s dividend payout ratios relative to net income and net cash provided by operating activities were 60.2% and 39.6%, respectively. During 2023, the Company’s dividend payout ratios relative to net income and net cash provided by operating activities were 49.3% and 36.3%, respectively.
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.
The decrease from 2023 was primarily due to higher interest and income taxes paid. Common Stock Common stockholders’ equity as a percent of the total capitalization was 52.6% as of December 31, 2024, compared with 54.8% as of December 31, 2023. The ratio decreased in 2024 due to higher debt primarily from capital expenditures.
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.
Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $2,000. This estimate is subject to adjustment as more facts become available. Table of Contents Page 19 Drought On November 1, 2024, Pennsylvania state officials declared a drought watch for 33 counties in Pennsylvania, including all four counties in the Company’s service territory.
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.
The primary reason for the increase was a rate increase effective March 1, 2023. Growth in the customer base also added to revenues. The average number of water customers served in 2024 increased as compared to 2023 by 999 customers, from 71,416 to 72,415 customers.
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 anticipates construction and acquisition expenditures for 2025 and 2026 of approximately $46,000 and $48,500, respectively, exclusive of any acquisitions not yet approved.
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.
The present values of the Company’s future pension obligations were determined using a discount rate of 5.45% at December 31, 2024 and 4.75% at December 31, 2023.
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 did benefit from a lower contribution to the pension plans. The overall effect was a decrease in net income in 2024 over 2023 of 14.4% and a return on year end common equity of 8.8%.
The warning calls for a voluntary reduction in nonessential water use of 10 to 15 percent and the watch calls for a voluntary reduction in nonessential water use of 5 to 10 percent. In addition, the Company has implemented a voluntary restriction on nonessential water use within its service territory.
The watch calls for a voluntary reduction in nonessential water use of 5 to 10 percent. The watch conditions could potentially impact future revenues and net income depending on the length and severity of the dry conditions.
Performance Measures Company management uses financial measures including operating revenues, net income, earnings per share and return on equity to evaluate its financial performance. Additional statistical measures including number of customers, customer complaint rate, annual customer rates and the efficiency ratio are used to evaluate performance quality.
Paperless billing, expanding online services, negotiation of favorable electric, banking, and other costs, and reduced pension contributions are examples of the Company’s recent efforts to minimize costs. Performance Measures Company management uses financial measures including operating revenues, net income, earnings per share and return on equity to evaluate its financial performance.
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.
The primary contributing factors to the decrease were higher operating expenses, a lower allowance for funds used during construction, and higher interest on debt, which were partially offset by higher operating revenues and lower pension costs. Operating revenues for 2024 increased $3,928, or 5.5%, from $71,031 for 2023 to $74,959 for 2024.
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.
Total per capita consumption for 2024 was approximately 0.8% lower than the same period of last year. In 2025, the Company expects revenues to show a modest increase due to revenues from the DSIC and an increase in the number of water and wastewater customers from acquisitions and growth within the Company’s service territory.
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 return on year end common equity was lower than the 2023 result and the five year historical average return on year end common equity of 10.7%. The Company expects to file a rate increase request in 2025 which may increase its opportunity to earn a higher return on year end common equity in the future.
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.
In 2025, other income (expenses) will be largely determined by the change in market returns and discount rates for retirement programs and related assets. Income tax expense for 2024 increased $73 as compared to 2023 due to lower deductions for the Internal Revenue Service, or IRS, tangible property regulations, or TPR.
Table of Contents Page 13 Operating expenses for 2023 increased $5,922, or 16.6%, from $35,578 for 2022 to $41,500 for 2023.
Other regulatory actions, weather patterns, and economic conditions could impact results. Table of Contents Page 14 Operating expenses for 2024 increased $5,418, or 13.1%, from $41,500 for 2023 to $46,918 for 2024.
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.
Allowance for funds used during construction in 2025 is expected to decrease based on a projected decrease in the amount of eligible construction. Other pension costs reflect decreased expense of $1,606 in 2024 due to a lower contribution to the pension plans. In 2025, other pension costs is expected to be similar to 2024.
Removed
Paperless billing, expanding online services, negotiation of favorable electric, banking, and other costs, as well as taking advantage of the Tax Cuts and Jobs Act of 2017, or the 2017 Tax Act, and the Internal Revenue Service, or IRS, tangible property regulations, or TPR, are examples of the Company’s recent efforts to minimize costs.
Added
The average number of wastewater customers served in 2024 increased as compared to 2023 by 522 customers, from 5,999 to 6,521 customers, primarily due to acquisitions. There was increased revenues from the DSIC allowed by the PPUC of $137.
Removed
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.
Added
The DSIC allows the Company to add a charge to customers’ water bills for qualified replacement costs of certain infrastructure without submitting a rate filing. The DSIC reset to zero on March 1, 2023 when the new rate order took effect and began again in June 2024 for bills rendered after July 1, 2024.
Removed
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.
Added
Other operating expenses increased by a net of $415. The increase was partially offset by reduced fuel expenses of $199 for the prior year pumping of raw water from the Susquehanna River, not repeated in 2024.
Removed
On July 17, 2023, the Company signed an agreement to purchase the wastewater collection and treatment assets of York Haven Sewer Authority in York Haven Borough, York County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.

… 14 more changes not shown on this page.

Other YORW 10-K year-over-year comparisons