10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)
	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2015
OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________to____________

Commission file number 001-34245
THE YORK WATER COMPANY
(Exact name of registrant as specified in its charter)
PENNSYLVANIA	23-1242500
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
130 EAST MARKET STREET, YORK, PENNSYLVANIA	17401
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number, including area code (717) 845-3601
Securities registered pursuant to Section 12(b) of the Act:
None
(Title of Each Class)	(Name of Each Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, NO PAR VALUE

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 YES			 NO
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
 YES			 NO
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 YES			 NO
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 YES			 NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (check one):
	Large accelerated filer 	Accelerated filer 
	Non-accelerated filer 	Small Reporting Company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 YES	 NO

The aggregate market value of the Common Stock, no par value, held by nonaffiliates of the registrant on June 30, 2015was $268,720,487.

As of March 7, 2016 there were 12,826,147 shares of Common Stock, no par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Company's 2016 Annual Meeting of Shareholders are incorporated by reference into Part I and Part III.

TABLE OF CONTENTS

Forward-Looking Statements		3
PART I
Item 1.	Business	4
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	13
Item 2.	Properties	13
Item 3.	Legal Proceedings	14
Item 4.	Mine Safety Disclosures	15
PART II
Item 5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
Item 6.	Select Financial Data	17
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation	18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 8.	Financial Statements and Supplementary Data	29
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	56
Item 9A.	Controls and Procedures	56
Item 9B.	Other Information	59
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	59
Item 11.	Executive Compensation	59
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	60
Item 13.	Certain Relationships and Related Transactions, and Director Independence	60
Item 14.	Principal Accounting Fees and Services	60
PART IV
Item 15.	Exhibits and Financial Statement Schedules	60
Signatures		62
Index to Exhibits		63

Page 2

FORWARD-LOOKING STATEMENTS

Certain statements contained in this annual report and in documents incorporated by reference constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933.  Words such as "may," "should," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements.  These forward-looking statements include certain information relating to the Company's business strategy; statements including, but not limited to:

· the amount and timing of rate increases and other regulatory matters including the recovery of costs recorded as regulatory assets;

· expected profitability and results of operations;

· trends;

· goals, priorities and plans for, and cost of, growth and expansion;

· strategic initiatives;

· availability of water supply;

· water usage by customers; and

· the ability to pay dividends on common stock and the rate of those dividends.

The forward-looking statements in this Annual Report reflect what the Company currently anticipates will happen.  What actually happens could differ materially from what it currently anticipates will happen.  The Company does not intend to make a public announcement when forward-looking statements in this Annual Report are no longer accurate, whether as a result of new information, what actually happens in the future or for any other reason.  Important matters that may affect what will actually happen include, but are not limited to:

· changes in weather, including drought conditions or extended periods of heavy rainfall;

· levels of rate relief granted;

· the level of commercial and industrial business activity within the Company's service territory;

· construction of new housing within the Company's service territory and increases in population;

· changes in government policies or regulations, including the tax code;

· the ability to obtain permits for expansion projects;

· material changes in demand from customers, including the impact of conservation efforts which may impact the demand of customers for water;

· changes in economic and business conditions, including interest rates, which are less favorable than expected;

· loss of customers;

· changes in, or unanticipated, capital requirements;

· the impact of acquisitions;

· changes in accounting pronouncements;

· changes in the Company's credit rating or the market price of its common stock;

· the ability to obtain financing; and

· other matters set forth in Item 1A, "Risk Factors" of this Annual Report.

Page 3

THE YORK WATER COMPANY

PART I

Item 1. Business.

The York Water Company (the "Company") is the oldest investor-owned water utility in the United States and is duly organized under the laws of the Commonwealth of Pennsylvania.  The Company has operated continuously since 1816.  The primary business of the Company is to impound, purify to meet or exceed safe drinking water standards and distribute water.  The Company also owns and operates two wastewater collection and treatment systems.  The Company operates within its franchised territory, which covers 39 municipalities within York County, Pennsylvania and nine municipalities within Adams County, Pennsylvania.  The Company is regulated by the Pennsylvania Public Utility Commission, or PPUC, in the areas of billing, payment procedures, dispute processing, terminations, service territory, debt and equity financing and rate setting.  The Company must obtain PPUC approval before changing any practices associated with the aforementioned areas.

Water service is supplied through the Company's own distribution system.  The Company obtains the bulk of its water supply from both the South Branch and East Branch of the Codorus Creek, which together have an average daily flow of 73.0 million gallons.  This combined watershed area is approximately 117 square miles.  The Company has two reservoirs, Lake Williams and Lake Redman, which together hold up to approximately 2.2 billion gallons of water.  The Company has 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 also owns seven wells which are capable of providing a safe yield of approximately 366,000 gallons per day to supply water to its customers in Carroll Valley Borough and Cumberland Township, Adams County.  As of December 31, 2015, the Company's average daily availability was 35.4 million gallons, and average daily consumption was approximately 18.5 million gallons.  The Company's service territory had an estimated population of 194,000 as of December 31, 2015.  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, injectable drug delivery systems, air conditioning systems, laundry detergent, barbells and motorcycles.

The Company's water business is somewhat dependent on weather conditions, particularly the amount and timing of rainfall.  Revenues are particularly vulnerable to weather conditions in the summer months.  Prolonged periods of hot and dry weather generally cause increased water usage for watering lawns, washing cars, and keeping golf courses and sports fields irrigated.  Conversely, prolonged periods of dry weather could lead to drought restrictions from governmental authorities.  Despite the Company's adequate water supply, customers may be required to cut back water usage under such drought restrictions which would negatively impact revenues.  The Company has addressed some of this vulnerability by instituting minimum customer charges which are intended to cover fixed costs of operations under all likely weather conditions.

The Company's business does not require large amounts of working capital and is not dependent on any single customer or a very few customers for a material portion of its business.  Increases in revenues are generally dependent on the Company's ability to obtain rate increases from the PPUC in a timely manner and in adequate amounts and to increase volumes of water sold through increased consumption and increases in the number of customers served.  The Company continuously looks for water and wastewater acquisition and expansion opportunities both within and outside its current service territory as well as additional opportunities to enter into bulk water contracts with municipalities and other entities to supply water.

The Company has agreements with several municipalities to provide sewer billing services.  The Company also has a service line protection program on a targeted basis in order to further diversify its business.  Under this optional program, customers pay a fixed monthly fee, and the Company will repair or replace damaged customer service lines, as needed, subject to an annual maximum dollar amount.  Opportunities to expand both initiatives are being pursued.

Page 4

Competition

As a regulated utility, the Company operates within an exclusive franchised territory that is substantially free from direct competition with other public utilities, municipalities and other entities.  Although the Company has been granted an exclusive franchise for each of its existing community water and wastewater systems, the ability of the Company to expand or acquire new service territories may be affected by currently unknown competitors obtaining franchises to surrounding systems by application or acquisition.  These competitors may include other investor-owned utilities, nearby municipally-owned utilities and sometimes from strategic or financial purchasers seeking to enter or expand in the water and wastewater industry.  The addition of new service territory and the acquisition of other utilities are generally subject to review and approval by the PPUC.

Water and Wastewater Quality and Environmental Regulations

Provisions of water and wastewater service are subject to regulation under the federal Safe Drinking Water Act, the Clean Water Act and related state laws, and under federal and state regulations issued under these laws.  In addition, the Company is subject to federal and state laws and other regulations relating to solid waste disposal, dam safety and other aspects of its operations.

The federal Safe Drinking Water Act establishes criteria and procedures for the U.S. Environmental Protection Agency, or EPA, to develop national quality standards.  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.  In the future, the Company may be required to change its method of treating drinking water, and may incur additional capital investments if new regulations become effective.

Under the requirements of the Pennsylvania Safe Drinking Water Act, or SDWA, the Pennsylvania Department of Environmental Protection, or DEP, monitors the quality of the finished water supplied to customers.  The DEP requires the Company to submit weekly reports showing the results of daily bacteriological and other chemical and physical analyses. As part of this requirement, the Company conducts over 70,000 laboratory tests annually.  Management believes that the Company complies with the standards established by the agency under the SDWA.  The DEP assists the Company by regulating discharges into the Company's watershed area to prevent and eliminate pollution.

The federal Groundwater Rule became effective December 1, 2009 with implementation for community water supplies serving between 100 and 500 customers before April 1, 2012.  This rule requires additional testing of water from well sources, and under certain circumstances requires demonstration and maintenance of effective disinfection.  The Company holds public water supply permits issued by the DEP, which establishes the groundwater source operating conditions for its wells, including demonstrated 4-log treatment of viruses.  All of the satellite systems operated by the Company are in compliance with the federal Groundwater Rule.  The Company plans to make modifications at one of these systems to more reliably and consistently demonstrate 4-log treatment of viruses.

The Clean Water Act regulates discharges from water and wastewater treatment facilities into lakes, rivers, streams and groundwater.  The Company complies with this Act by obtaining and maintaining all required permits and approvals for discharges from its water and wastewater facilities and by satisfying all conditions and regulatory requirements associated with the permits.

The DEP monitors the quality of wastewater discharge effluent under the provisions of the National Pollutant Discharge Elimination System, or NPDES.  The Company submits monthly reports to the DEP showing the results of its daily effluent monitoring and removal of sludge and biosolids.  The Company is not aware of any significant environmental remediation costs necessary from the handling and disposal of waste material from its wastewater operations.

Page 5

The DEP and the Susquehanna River Basin Commission, or SRBC, regulate the amount of water withdrawn from streams in the watershed to assure that sufficient quantities are available to meet the needs of the Company and other regulated users.  Through its Division of Dam Safety, the DEP regulates the operation and maintenance of the Company's impounding 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 approximately every year.  The DEP most recently inspected the Company's dams in April 2014 and noted no significant violations.

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.  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.  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.  Management presented the results of the study to the DEP in December 2004, and DEP then requested that the Company submit a proposed schedule for the actions to address the spillway capacities.  Thereafter, the Company retained an engineering firm to prepare preliminary designs for increasing the spillway capacities to pass the PMF through armoring the dams with roller compacted concrete.  Management has met with the DEP on a regular basis to review the preliminary design and discuss scheduling, permitting, and construction requirements.  The Company is currently completing preliminary work on the dams as well as the final design and the permitting process.  The Company expects to begin armoring one of the dams between 2017 and 2019.  The second dam is expected to be armored in a year or two following the first dam armoring.  The cost to armor each dam is expected to be approximately $5 million.

Capital expenditures and operating costs required as a result of water quality standards and environmental requirements have been traditionally recognized by state public utility commissions as appropriate for inclusion in establishing rates.  The capital expenditures currently required as a result of water quality standards and environmental requirements have been budgeted in the Company's capital program and represent less than 10% of its expected total capital expenditures over the next five years.  The Company is currently in compliance with wastewater environmental standards and does not anticipate any major capital expenditures for its current wastewater business.

Page 6

Growth

During the five year period ended December 31, 2015, the Company continued to grow the number of customers and its distribution facilities.

The following table sets forth certain of the Company's summary statistical information.

(In thousands of dollars)	For the Years Ended December 31,
	2015		2014		2013		2012		2011
Revenues
Residential	$	29,682	$	29,079	$	26,796	$	26,114	$	25,693
Commercial and industrial		13,822		13,267		12,299		12,114		11,820
Other		3,585		3,554		3,288		3,219		3,116
Total	$	47,089	$	45,900	$	42,383	$	41,447	$	40,629
Average daily water consumption (gallons per day)		18,507,000		18,327,000		19,094,000		18,553,000		18,465,000
Miles of water mains at year-end		958		951		945		940		929
Additional water distribution mains installed/acquired (ft.)		40,873		28,523		28,051		59,653		17,212
Wastewater collection mains acquired (ft.)		-		28,250		-		14,820		-
Number of customers at year-end		66,087		65,102		64,118		63,779		62,738
Population served at year-end		194,000		192,000		190,000		189,000		187,000

Executive Officers of the Registrant

The Company presently has 104 full time employees including the officers detailed in the information set forth under the caption "Executive Officers of the Company" of the 2016 Proxy Statement incorporated herein by reference.

Available Information

The Company makes available free of charge, on or through its website (www.yorkwater.com), its annual report on Form 10-K, its quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC.

Shareholders may request, without charge, copies of the Company's financial reports.  Such requests, as well as other investor relations inquiries, should be addressed to:

Bonnie J. Rexroth	The York Water Company	(717) 845-3601
Investor Relations Administrator	130 East Market Street	(800) 750-5561
	York, PA  17401	bonnier@yorkwater.com

Page 7

Item 1A. Risk Factors.

The rates we charge our customers are subject to regulation. If we are unable to obtain government approval of our requests for rate increases, or if approved rate increases are untimely or inadequate to cover our investments in utility plant and equipment and projected expenses, our results of operations may be adversely affected.

Our ability to maintain and meet our financial objectives is dependent upon the rates we charge our customers, which are subject to approval by the PPUC.  We file rate increase requests with the PPUC, from time to time, to recover our investments in utility plant and equipment and projected expenses.  Any rate increase or adjustment must first be justified through documented evidence and testimony.  The PPUC determines whether the investments and expenses are recoverable, the length of time over which such costs are recoverable, or, because of changes in circumstances, whether a remaining balance of deferred investments and expenses is no longer recoverable in rates charged to customers.  Once a rate increase application is filed with the PPUC, the ensuing administrative and hearing process may be lengthy and costly.  The timing of our rate increase requests are therefore dependent upon the estimated cost of the administrative process in relation to the investments and expenses that we hope to recover through the rate increase.  In addition, the amount or frequency of rate increases may be decreased or lengthened as a result of changes in income tax laws regarding tax-basis depreciation as it applies to our capital expenditures or qualifying repair tax deductible expenditures.

We can provide no assurances that future requests will be approved by the PPUC; and, if approved, we cannot guarantee that these rate increases will be granted in a timely or sufficient manner to cover the investments and expenses for which we sought the rate increase.  If we are unable to obtain PPUC approval of our requests for rate increases, or if approved rate increases are untimely or inadequate to cover our investments in utility plant and equipment and projected expenses, our results of operations may be adversely affected.

We are subject to federal, state and local regulation that may impose costly limitations and restrictions on the way we do business.

Various federal, state and local authorities regulate many aspects of our business.  Among the most important of these regulations are those relating to the quality of water we supply our customers, water allocation rights and the quality of the effluent we discharge from our wastewater treatment facility.  Government authorities continually review these regulations, particularly the drinking water quality regulations, and may propose new or more restrictive requirements in the future.  We are required to perform water and wastewater quality tests that are monitored by the PPUC, the EPA, and the DEP, for the detection of certain chemicals and compounds in our water and effluent.  If new or more restrictive limitations on permissible levels of substances and contaminants in our water and wastewater are imposed, we may not be able to adequately predict the costs necessary to meet regulatory standards.  If we are unable to recover the cost of implementing new water and wastewater treatment procedures in response to more restrictive quality regulations through our rates that we charge our customers, or if we fail to comply with such regulations, it could have a material adverse effect on our financial condition and results of operations.

We are also subject to water allocation regulations that control the amount of water that we can draw from water sources. The SRBC and the DEP regulate the amount of water withdrawn from streams in the watershed for water supply purposes to assure that sufficient quantities are available to meet our needs and the needs of other regulated users.  In addition, government drought restrictions could cause the SRBC or the DEP to temporarily reduce the amount of our allocations.  If new or more restrictive water allocation regulations are implemented or our allocations are reduced due to weather conditions, it may have an adverse effect on our ability to supply the demands of our customers, and in turn, on our revenues and results of operations.

Our business is subject to seasonal fluctuations, which could affect demand for our water service and our revenues.

Demand for our water during the warmer months is generally greater than during cooler months due primarily to additional requirements for water in connection with cooling systems, swimming pools, irrigation systems and other outside water use.  Throughout the year, and particularly during typically warmer months, demand will vary with temperature and rainfall levels.  If temperatures during the typically warmer months are cooler than expected, or there is more rainfall than expected, the demand for our water may decrease and adversely affect our revenues.

Page 8

Weather conditions and overuse may interfere with our sources of water, demand for water services, and our ability to supply water to our customers.

We depend on an adequate water supply to meet the present and future demands of our customers and to continue our expansion efforts.  Unexpected conditions may interfere with our water supply sources.  Drought and overuse may limit the availability of surface and ground water.  These factors might adversely affect our ability to supply water in sufficient quantities to our customers and our revenues and earnings may be adversely affected.  Additionally, cool and wet weather, as well as drought restrictions and our customers' conservation efforts, may reduce consumption demands, also adversely affecting our revenue and earnings.  Furthermore, freezing weather may also contribute to water transmission interruptions caused by pipe and main breakage.  If we experience an interruption in our water supply, it could have a material adverse effect on our financial condition and results of operations.

Some scientific experts are predicting a worsening of weather volatility in the future, possibly created by the climate change greenhouse gases.  Changing severe weather patterns could require additional expenditures to reduce the risk associated with any increasing storm, flood and drought occurrences.

The issue of climate change is receiving ever increasing attention worldwide.  Many climate change predictions, if true, present several potential challenges to water and wastewater utilities, such as increased frequency and duration of droughts, increased precipitation and flooding, potential degradation of water quality, and changes in demand for services.  The changes may result in lower revenue, the need for additional capital expenditures, or increased costs.  Because of the uncertainty of weather volatility related to climate change, we cannot predict its potential impact on our business, financial condition, or results of operations.  Although any potential expenditures and costs may be recovered in the form of higher rates, there can be no assurance that the PPUC would approve rate increases to enable us to recover such expenditures and costs.  We cannot assure you that our costs of complying with any climate change related measures will not harm our business, financial condition, or results of operations.

General economic conditions may affect our financial condition and results of operations.

A general economic downturn may lead to a number of impacts on our business that may affect our financial condition and results of operations.  Such impacts may include: a reduction in discretionary and recreational water use by our residential water customers, particularly during the summer months when such discretionary usage is normally at its highest; a decline in usage by industrial and commercial customers as a result of decreased business activity; an increased incidence of customers' inability to pay or delays in paying their utility bills, or an increase in customer bankruptcies, which may lead to higher bad debt expense and reduced cash flow; a lower customer growth rate due to a decline in new housing starts; and a decline in the number of active customers due to housing vacancies or abandonments.  A deterioration in general economic conditions may also lead to an investment market downturn, which may result in our pension plans' asset market values suffering a decline and significant volatility.  A decline in our pension plans' asset market values could increase our required cash contributions to these plans and pension expense in subsequent years.

The current concentration of our business in central and southern Pennsylvania makes us particularly susceptible to adverse developments in local economic and demographic conditions.

Our service territory presently includes 39 municipalities within York County, Pennsylvania and nine municipalities within Adams County, Pennsylvania.  Our revenues and operating results are therefore especially subject to local economic and demographic conditions in the area.  A change in any of these conditions could make it more costly or difficult for us to conduct our business.  In addition, any such change would have a disproportionate effect on us, compared to water and wastewater utility companies that do not have such a geographic concentration.

Page 9

Contamination of our water supply may cause disruption in our services and adversely affect our revenues.

Our water supply is subject to contamination from the migration of naturally-occurring substances in groundwater and surface systems and pollution resulting from man-made sources.  In the event that our water supply is contaminated, we may have to interrupt the use of that water supply until we are able to substitute the flow of water from an uncontaminated water source through our interconnected transmission and distribution facilities.  In addition, we may incur significant costs in order to treat the contaminated source through expansion of our current treatment facilities or development of new treatment methods.  Our inability to substitute water supply from an uncontaminated water source, or to adequately treat the contaminated water source in a cost-effective manner, may have an adverse effect on our revenues.

The necessity for increased security has and may continue to result in increased operating costs.

We have taken steps to increase security measures at our facilities and heighten employee awareness of threats to our water supply.  We have also tightened our security measures regarding the delivery and handling of certain chemicals used in our business.  We have and will continue to bear increased costs for security precautions to protect our facilities, operations and supplies.  We are not aware of any specific threats to our facilities, operations or supplies.  However, it is possible that we would not be in a position to control the outcome of such events should they occur.

The growing dependence on digital technology has increased the risks related to cybersecurity.

Computers and the Internet have led to increased productivity and improved customer service.  Unfortunately, progress in this area has brought with it cybersecurity risks.  Recently, the frequency and severity of cyber attacks on companies has increased resulting in a disruption to business operations and the corruption or misappropriation of proprietary data.  We have and will continue to bear increased costs for security precautions to protect our information technology.  However, if such an attack was to occur and could not be prevented, customer information could be misappropriated, our networks may be down for an extended period of time disrupting our business, and it could require costly replacement of hardware and software.  We carry cyber liability insurance, however, our limits may not be sufficient to cover all losses or liabilities.

We depend on the availability of capital for expansion, construction and maintenance.

Our ability to continue our expansion efforts and fund our construction and maintenance program depends on the availability of adequate capital.  There is no guarantee that we will be able to obtain sufficient capital in the future or that the cost of capital will not be too high for future expansion and construction.  In addition, approval from the PPUC must be obtained prior to our sale and issuance of securities.  If we are unable to obtain approval from the PPUC on these matters, or to obtain approval in a timely manner, it may affect our ability to effect transactions that are beneficial to us or our shareholders.  A single transaction may itself not be profitable but might still be necessary to continue providing service or to grow the business.

The failure to maintain our existing credit rating could affect our cost of funds and related liquidity.

Standard & Poor's Ratings Services rates our outstanding debt and has given a credit rating to us.  Their evaluations are based on a number of factors, which include financial strength as well as transparency with rating agencies and timeliness of financial reporting.  Failure to maintain our current credit rating could adversely affect our cost of funds and related liquidity.

We may face competition from other water suppliers that may hinder our growth and reduce our profitability.

We face competition from other water suppliers for acquisitions, which may limit our growth opportunities.  Furthermore, even after we have been the successful bidder in an acquisition, competing water suppliers may challenge our application for extending our franchise territory to cover the target company's market.  Finally, third parties either supplying water on a contract basis to municipalities or entering into agreements to operate municipal water systems might adversely affect our business by winning contracts that may be beneficial to us.  If we are unable to compete successfully with other water suppliers for these acquisitions, franchise territories and contracts, it may impede our expansion goals and adversely affect our profitability.

Page 10

An important element of our growth strategy is the acquisition of water and wastewater systems.  Any pending or future acquisitions we decide to undertake will involve risks.

The acquisition and integration of water and wastewater systems is an important element in our growth strategy.  This strategy depends on identifying suitable acquisition opportunities and reaching mutually agreeable terms with acquisition candidates.  The negotiation of potential acquisitions as well as the integration of acquired businesses could require us to incur significant costs.  Further, acquisitions may result in dilution for the owners of our common stock, our incurrence of debt and contingent liabilities and fluctuations in quarterly results.  In addition, the businesses and other assets we acquire may not achieve the financial results that we expect, which could adversely affect our profitability.

We have restrictions on our dividends. There can also be no assurance that we will continue to pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends.

The terms of our debt instruments impose conditions on our ability to pay dividends.  We have paid dividends on our common stock each year since our inception in 1816 and have increased the amount of dividends paid each year since 1997.  Our earnings, financial condition, capital requirements, applicable regulations and other factors, including the timeliness and adequacy of rate increases, will determine both our ability to pay dividends on our common stock and the amount of those dividends.  There can be no assurance that we will continue to pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends.

If we are unable to pay the principal and interest on our indebtedness as it comes due or we default under certain other provisions of our loan documents, our indebtedness could be accelerated and our results of operations and financial condition could be adversely affected.

Our ability to pay the principal and interest on our indebtedness as it comes due will depend upon our current and future performance.  Our performance is affected by many factors, some of which are beyond our control.  We believe that our cash generated from operations, and, if necessary, borrowings under our existing credit facilities will be sufficient to enable us to make our debt payments as they become due.  If, however, we do not generate sufficient cash, we may be required to refinance our obligations or sell additional equity, which may be on terms that are not as favorable to us.  No assurance can be given that any refinancing or sale of equity will be possible when needed or that we will be able to negotiate acceptable terms.  In addition, our failure to comply with certain provisions contained in our trust indentures and loan agreements relating to our outstanding indebtedness could lead to a default under these documents, which could result in an acceleration of our indebtedness.

We depend significantly on the services of the members of our senior management team, and the departure of any of those persons could cause our operating results to suffer.

Our success depends significantly on the continued individual and collective contributions of our senior management team.  If we lose the services of any member of our senior management or are unable to hire and retain experienced management personnel, our operating results could suffer.

Work stoppages and other labor relations matters could adversely affect our operating results.

Approximately one-third of our workforce is unionized under a contract with a labor union.  In light of rising costs for healthcare and retirement benefits, contract negotiations in the future may be difficult.  We are subject to a risk of work stoppages and other labor actions as we negotiate with the union to address these issues, which could affect our business, financial condition, and results of operations.  Although we believe we have a good relationship with our union workforce and have a strike contingency plan, we cannot be assured that issues with our labor force will be resolved favorably to us in the future or that we will not experience work stoppages.

Page 11

There is a limited trading market for our common stock; you may not be able to resell your shares at or above the price you pay for them.

Although our common stock is listed for trading on the NASDAQ Global Select Market, the trading in our common stock has substantially less liquidity than many other companies quoted on the NASDAQ Global Select Market.  A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the market of willing buyers and sellers of our common stock at any given time.  This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control.  Because of the limited volume of trading in our common stock, a sale of a significant number of shares of our common stock in the open market could cause our stock price to decline.

The failure of, or the requirement to repair, upgrade or dismantle, either of our dams may adversely affect our financial condition and results of operations.

Our water system includes two impounding dams.  While we maintain robust dam maintenance and inspection programs, a failure of the dams could result in injuries and damage to residential and/or commercial property downstream for which we may be responsible, in whole or in part.  The failure of a dam could also adversely affect our ability to supply water in sufficient quantities to our customers and could adversely affect our financial condition and results of operations.  We carry liability insurance on our dams, however, our limits may not be sufficient to cover all losses or liabilities incurred due to the failure of one of our dams.  The estimated costs to maintain and upgrade our dams are included in our capital budget.  Although such costs have previously been recoverable in rates, there is no guarantee that these costs will continue to be recoverable and in what magnitude they will be recoverable.

Wastewater operations entail significant risks and may impose significant costs.

Wastewater collection and treatment and septage pumping and sludge hauling involve various unique risks.  If collection or treatment systems fail or do not operate properly, or if there is a spill, untreated or partially treated wastewater could discharge onto property or into nearby streams and rivers, causing various damages and injuries, including environmental damage.  These risks are most acute during periods of substantial rainfall or flooding, which are the main causes of sewer overflow and system failure.  Liabilities resulting from such damages and injuries could materially and adversely affect our business, financial condition, and results of operations.

The final determination of our income tax liability may be materially different from our income tax provision.

Significant judgment is required in determining our provision for income taxes.  The calculation of the provision for income taxes is subject to our interpretation of applicable business tax laws in the federal and state jurisdictions in which we file.  In addition, our income tax returns are subject to periodic examination by the Internal Revenue Service, or IRS, and other taxing authorities.  In December 2014, we changed our tax method of accounting to permit the expensing of qualifying asset improvement costs that were previously being capitalized and depreciated for tax purposes.  Our determination of what qualifies as a capital cost versus a repair expense tax deduction is subject to subsequent adjustment and may impact the income tax benefits that have been recognized.  Although we believe our income tax estimates are appropriate, there is no assurance that the final determination of our income tax liability will not be materially different, either higher or lower, from what is reflected in our income tax provision.  In the event we are assessed additional income taxes, our business, financial condition, and results of operations could be adversely affected.

We are subject to market and interest rate risk on our $12,000,000 variable interest rate debt issue.

We are subject to interest rate risk in conjunction with our $12,000,000 variable interest rate debt issue.  This exposure, however, has been hedged with an interest rate swap.  This hedge will protect the Company from the risk of changes in the benchmark interest rates, but does not protect the Company's exposure to the changes in the difference between its own variable funding rate and the benchmark rate.  A breakdown of the historical relationships between the cost of funds of the Company and the benchmark rate underlying the interest rate swap could result in higher interest rates adversely affecting our financial results.

Page 12

The holders of the $12,000,000 variable rate Pennsylvania Economic Development Financing Authority (PEDFA) Series A Bonds may tender their bonds at any time.  When the bonds are tendered, they are subject to an annual remarketing agreement, pursuant to which a remarketing agent attempts to remarket the tendered bonds pursuant to the terms of the Indenture.  In order to keep variable interest rates down and to enhance the marketability of the Series A Bonds, the Company entered into a Reimbursement, Credit and Security Agreement with PNC Bank, National Association ("the Bank") dated as of May 1, 2008.  This agreement provides for a direct pay letter of credit issued by the Bank to the trustee for the Series A Bonds.  The letter of credit expires June 30, 2017 and is reviewed annually for a potential extension of the expiration date.  The Bank is responsible for providing the trustee with funds for the timely payment of the principal and interest on the Series A Bonds and for the purchase price of the Series A Bonds that have been tendered or deemed tendered for purchase and have not been remarketed.  If the Bank is unable to meet its obligations, the Company would be required to buy any bonds which had been tendered.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Source of Water Supply

The Company owns two impounding dams 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 upper dam, the Lake Redman Impounding Dam, creates a reservoir covering approximately 290 acres containing about 1.3 billion gallons of water.

In addition to the two impounding dams, the Company owns a 15-mile pipeline from the Susquehanna River to Lake Redman that provides access to a supply of an additional 12.0 million gallons of water per day.

The Company also owns three satellite water systems in Adams County, Pennsylvania.  The Carroll Valley Water System consists of two groundwater wells capable of providing a safe yield of approximately 100,000 gallons per day with a current average daily consumption of 12,000 gallons per day.  The Western Cumberland Water System (formerly Lincoln Estates) consists of three groundwater wells capable of providing a safe yield of 144,000 gallons per day with a current average daily consumption of 18,000 gallons per day.  The Eastern Cumberland Water System (formerly The Meadows) consists of two groundwater wells capable of providing a safe yield of 122,000 gallons per day with a current average daily consumption of 17,000 gallons per day.

As of December 31, 2015, the Company's present average daily availability was 35.4 million gallons, and daily consumption was approximately 18.5 million gallons.

Pumping Stations

The Company's main pumping station is located in Spring Garden Township on the south branch of the Codorus Creek about four miles downstream from the Company's lower impounding dam.  The pumping station presently houses pumping equipment consisting of three electrically driven centrifugal pumps and two diesel-engine driven centrifugal pumps with a combined pumping capacity of 68.0 million gallons per day.  The pumping capacity is more than double peak requirements and is designed to provide an ample safety margin in the event of pump or power failure.  A large diesel backup generator is installed to provide power to the pumps in the event of an emergency. The untreated water is pumped approximately two miles to the filtration plant through pipes owned by the Company.

The Susquehanna River Pumping Station is located on the western shore of the Susquehanna River several miles south of Wrightsville, PA.  The pumping station is equipped with three Floway Vertical Turbine pumps rated at 6 million gallons per day each.  The pumping station pumps water from the Susquehanna River approximately 15 miles through a combination of 30" and 36" ductile iron main to the Company's upper impounding dam, located at Lake Redman.

Page 13

Treatment Facilities

The Company's water filtration plant is located in Spring Garden Township about one-half mile south of the City of York. Water at this plant is filtered through twelve dual media filters having a stated capacity of 31.0 million gallons per day with a maximum supply of 42.0 million gallons per day for short periods if necessary.  Based on an average daily consumption in 2015 of approximately 18.5 million gallons, the Company believes the pumping and filtering facilities are adequate to meet present and anticipated demands.  In 2005, the Company performed a capacity study of the filtration plant, and in 2007, began upgrading the facility to increase capacity to meet peak demands, for operational redundancy, and for future growth.  The current phase of the upgrade, replacement of the filter media, began in 2013 and is expected to be completed in 2016.

The Company's sediment recycling facility is located adjacent to its water filtration plant.  This state of the art facility employs cutting edge technology to remove fine, suspended solids from untreated water.  The Company estimates that through this energy efficient, environmentally friendly process, approximately 600 tons of sediment will be removed annually, thereby improving the quality of the Codorus Creek watershed.

The Company's two wastewater treatment facilities are located in East Manchester and Lower Windsor Townships.  The two wastewater treatment plants are each small, packaged, extended aeration activated sludge facilities with a combined average daily flow capacity of 167,000 gallons.  With a projected maximum daily demand of 77,000 gallons, the plants' flow paths offer both capacity and operational redundancy for maintenance, high flow events, and potential growth.

Distribution and Collection

The distribution system of the Company has approximately 958 miles of water main lines which range in diameter from 2 inches to 36 inches.  The distribution system includes 31 booster stations and 33 standpipes and reservoirs capable of storing approximately 58.0 million gallons of potable water.  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.

The two wastewater collection systems of the Company have a combined approximate 38,270 feet of 6 inch and 8 inch gravity collection mains and 4,800 feet of 6" pressure force main along with 3 sewage pumping stations each rated at 80 gallons per minute.

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 administrative and executive offices of the Company are located in one three-story and one two-story brick and masonry buildings, containing a total of approximately 21,861 square feet, in the City of York, Pennsylvania.

All of the Company's properties described above are held in fee by the Company.  There are no material encumbrances on such properties.

In 1976, the Company entered into a Joint Use and Park Management Agreement with York County under which the Company licensed use of certain of its lands and waters for public park purposes for a period of 50 years.  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.

Page 14

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Common Stock and Dividends

The common stock of The York Water Company is traded on the NASDAQ Global Select Market (Symbol "YORW").  Quarterly price ranges and cash dividends per share for the last two years follow:

	2015						2014
	High		Low		Dividend*		High		Low		Dividend*
1st Quarter	$	24.97	$	21.08	$	0.1495	$	21.50	$	19.45	$	0.1431
2nd Quarter		25.99		20.69		0.1495		20.98		19.00		0.1431
3rd Quarter		22.72		19.69		0.1495		21.20		18.85		0.1431
4th Quarter		26.67		20.93		0.1555		24.25		19.75		0.1495

*Cash dividends per share reflect dividends declared at each dividend date.

Prices listed in the above table are sales prices as listed on the NASDAQ Global Select Market.  Shareholders of record (excluding individual participants in securities positions listings) as of December 31, 2015 numbered approximately 2,007.

Dividend Policy

Dividends on the Company's common stock are declared by the Board of Directors and are normally paid in January, April, July and October.  Dividends are paid based on shares outstanding as of the stated record date, which is ordinarily the last day of the calendar month immediately preceding the dividend payment.

The dividend paid on the Company's common stock on January 15, 2016 was the 580th consecutive dividend paid by the Company.  The Company has paid consecutive dividends for its entire history, since 1816.  The policy of the Company's Board of Directors is currently to pay cash dividends on a quarterly basis.  The dividend rate has been increased annually for nineteen consecutive years.  The Company's Board of Directors declared dividend number 581 in the amount of $0.1555 per share at its February 2016 meeting.  The dividend is payable on April 15, 2016 to shareholders of record as of February 29, 2016.  Future cash 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 4 to the Company's financial statements included herein for restrictions on dividend payments.

Purchases of Equity Securities by the Company

On March 11, 2013, the Board of Directors authorized a share repurchase program granting the Company authority to repurchase up to 1,200,000 shares of the Company's common stock from time to time.  Under the stock repurchase program, the Company may repurchase shares in the open market or through privately negotiated transactions.  The Company may suspend or discontinue the repurchase program at any time.  The Company did not repurchase any shares that were not part of the publicly announced plan during the quarter ended December 31, 2015.

Page 15

The following table summarizes the Company's purchases of its common stock for the quarter ended December 31, 2015.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as a Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
Oct. 1 – Oct. 31, 2015		2,200	$	22.93		2,200		702,004
Nov. 1 – Nov. 30, 2015		-	$	-		-		702,004
Dec. 1 – Dec. 31, 2015		-	$	-		-		702,004
Total		2,200	$	22.93		2,200		702,004

The Company's loan agreements contain various covenants and restrictions regarding dividends and share repurchases.  As of December 31, 2015, management believes it was in compliance with all of these restrictions.  See Note 4 for additional information regarding these restrictions.

The Company will fund repurchases under the share repurchase program with internally generated funds and borrowings under its credit facilities, if necessary.

Performance Graph

The following line graph presents the annual and cumulative total shareholder return for The York Water Company Common Stock over a five-year period from 2010 through 2015, based on the market price of the Common Stock and assuming reinvestment of dividends, compared with the cumulative total shareholder return of companies in the S&P 500 Index and a peer group made up of publicly traded water utilities, also assuming reinvestment of dividends.  The peer group companies include:  American States, American Water, Aqua America, Artesian Resources, California Water Service, Connecticut Water, Middlesex Water and San Jose Water.

Page 16

Item 6. Selected Financial Data.

(All dollar amounts are stated in thousands of dollars.)

	Summary of Operations
For the Year	2015			2014			2013			2012			2011
Operating revenues	$	47,089		$	45,900		$	42,383		$	41,447		$	40,629
Operating expenses		24,428			23,823			21,622			20,874			20,754
Operating income		22,661			22,077			20,761			20,573			19,875
Interest expense		4,847			4,877			5,162			5,144			5,155
Gain on sale of land		-			316			-			-			-
Other income (expenses), net		(585	)		(1,155	)		(133	)		(520	)		(677	)
Income before income taxes		17,229			16,361			15,466			14,909			14,043
Income taxes		4,740			4,877			5,812			5,606			4,959
Net income	$	12,489		$	11,484		$	9,654		$	9,303		$	9,084
Per Share of Common Stock
Book value	$	8.51		$	8.15		$	7.98		$	7.73		$	7.45
Basic earnings per share		0.97			0.89			0.75			0.72			0.71
Cash dividends declared per share		0.6040			0.5788			0.5580			0.5391			0.5266
Weighted average number of shares outstanding during the year		12,831,687			12,879,912			12,928,040			12,847,160			12,734,420
Utility Plant
Original cost, net of acquisition adjustments	$	325,691		$	313,003		$	298,670		$	289,579		$	278,344
Construction expenditures		13,844			14,139			9,852			11,543			9,472
Other
Total assets	$	313,491		$	304,339		$	282,529		$	282,490		$	274,219
Long-term debt including current portion		87,305			84,885			84,928			84,975			85,017

For Management's Discussion and Analysis of Financial Condition and Results of Operations, please refer to Item 7 of this Annual Report.

Page 17

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 operates two wastewater collection and treatment systems.  The Company is a purely regulated water and wastewater utility.  Profitability is largely dependent on water revenues.  Due to the size of the Company and the limited geographic diversity of its service territory, weather conditions, particularly rainfall, economic, and market conditions can have an adverse effect on revenues.  Market conditions and the economy in general remain sluggish.  While there was little organic growth in the customer base in 2015, total water usage per customer declined by only 0.1% compared to 2014.

The Company increased revenues in 2015 compared to 2014 due to an 11.7% rate increase effective February 28, 2014, an interconnection with a neighboring municipality to provide water due to an emergency event, and growth in the customer base as a result of acquisitions.

The Company's business does not require large amounts of working capital and is not dependent on any single customer or a very few customers for a material portion of its business.  In 2015, operating revenue was derived from the following sources and in the following percentages: residential, 63%; commercial and industrial, 29%; and other, 8% which is primarily from the provision for fire service and other water and wastewater service-related income.  The customer mix helps to reduce volatility in consumption.

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 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.

The Company has entered into agreements with several municipalities to provide sewer billing services.  The Company also has a service line protection program on a targeted basis.  Opportunities to expand both initiatives are being pursued to further diversify the business.

In addition to increasing revenue, the Company consistently focuses on minimizing costs without sacrificing water quality or customer service.  Paperless billing, negotiation of favorable electric and banking costs, as well as taking advantage of the IRS tangible property regulations are examples of some of the Company's 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.  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 2015 was strong under the above measures.  Residual increases from a prior year rate filing, higher consumption from an interconnection with a neighboring municipality, and increases in the number of customers mostly as a result of acquisitions resulted in higher revenue and offset the higher operating expenses recorded in 2015.  The Company also benefited from a decrease in other net expenses and lower income taxes despite higher income due to the effects of the IRS tangible property regulations, or TPR.  The overall effect was an increase in net income in 2015 over 2014 of 8.8% and a return on year end common equity of 11.5%, its highest level in more than five years.

Page 18

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 23.1%.  In 2015, the ratio was higher than the average at 26.5% due to the higher net income resulting from higher revenue and lower income taxes.  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.

Results of Operations

2015 Compared with 2014

Net income for 2015 was $12,489, an increase of $1,005, or 8.8%, from net income of $11,484 for 2014.  The primary contributing factors to the increase in net income were higher operating revenues, lower retirement expenses and reduced charitable contributions.  The increased income was partially offset by higher operating expenses and a non-recurring prior year gain on the sale of land.

Operating revenues for the year increased $1,189, or 2.6%, from $45,900 for 2014 to $47,089 for 2015.  The primary reason for the increase was a rate increase effective February 28, 2014.  Additionally, revenues increased from an interconnection with a neighboring municipality to provide water due to an emergency event and from an increase in customers.  The average number of customers served in 2015 increased as compared to 2014 by 894 customers, from 64,773 to 65,667 customers, due primarily to recent acquisitions.  Total per capita consumption for 2015 was 0.1% lower than last year.  The Company expects revenues for 2016 to show a modest increase over 2015 due to an increase in the number of water and wastewater customers due to recently announced acquisitions.  Other regulatory actions and weather patterns could impact results.

Operating expenses for the year increased $605, or 2.5%, from $23,823 for 2014 to $24,428 for 2015.  The increase was primarily due to higher depreciation expense of approximately $219, increased water treatment chemical usage of approximately $131 due to weather conditions, and higher pension expense of approximately $118.  Also adding to the increase were higher expenses of approximately $71 for sediment hauling and a survey of piping at the water treatment plant, $45 for insurance, $33 for information technology strategic planning and $31 for credit card fees due to increased on-line payments.  The increased expenses were partially offset by a reduction of $32 for power.  Other expenses decreased by a net of $11.  In 2016, the Company expects depreciation expense to continue to rise due to additional investment in utility plant, and other expenses to increase at a moderate rate as costs to maintain and extend the distribution system continue to rise and as additional water and wastewater systems are acquired.

Interest expense on debt for 2015 decreased $34, or 0.7%, from $5,087 for 2014 to $5,053 for 2015.  The decrease was due to the 2014 bond refinancing at a lower interest rate. The decrease was partially offset by an increase in interest due to additional long-term debt outstanding.  Interest expense for 2016 is expected to increase due to the increase in long-term debt outstanding (see Note 4 to the financial statements) and possible line of credit borrowings.

Allowance for funds used during construction decreased $4, from $210 in 2014 to $206 in 2015, due to a lower volume of eligible construction.  Allowance for funds used during construction in 2016 is expected to show a modest increase based on a projected increase in the amount of eligible construction.

A non-recurring gain on the sale of land of $316 was recorded in 2014 as a result of a PennDOT realignment project which included a portion of the Company's distribution facility property.  No additional land sales are anticipated at this time.

Other income (expenses), net for 2015 reflects reduced expenses of $570 as compared to 2014.  The net change was primarily due to reduced retirement expense of $443 and lower charitable contributions of $296.  The reduced expenses were partially offset by lower earnings on life insurance policies of approximately $165.  Other expenses aggregating approximately $4 increased as compared to 2014.  In 2016, other income (expenses) will largely be determined by the change in market returns and discount rates for retirement programs and related assets.

Page 19

Income taxes for 2015 decreased $137, or 2.8%, compared to 2014 due to the continued tax benefit of the IRS TPR.  (See the Income Taxes, Deferred Income Taxes and Uncertain Tax Positions section included herein for additional details.)  The Company's effective tax rate was 27.5% for 2015 and 29.8% for 2014.  The Company expects the effective tax rate to be approximately 28% to 32% in 2016 due to the continued expensing of asset improvements that would have been capitalized for tax purposes prior to the implementation of the TPR.

2014 Compared with 2013

Net income for 2014 was $11,484, an increase of $1,830, or 19.0%, from net income of $9,654 for 2013.  The primary contributing factors to the increase in net income were higher operating revenues and lower income taxes which were partially offset by higher operating and retirement expenses.

Operating revenues for 2014 increased $3,517, or 8.3%, from $42,283 for 2013 to $45,900 for 2014.  The primary reason for the increase was an 11.7% rate increase effective February 28, 2014.  Total per capita consumption for the year was 0.4% lower than 2013.  The average number of water customers served in 2014 increased as compared to 2013 by 429 customers, from 63,774 to 64,203 customers.  The average number of wastewater customers served in 2014 increased as compared to 2013 by 340 customers, from 230 to 570 customers, due to the East Prospect acquisition.

Operating expenses for 2014 increased $2,201, or 10.2%, from $21,622 for 2013 to $23,823 for 2014.  The increase was primarily due to higher pension expense of approximately $589 and increased salary and wage expense of approximately $489.  Also adding to the increase were higher expenses of $188 for depreciation, $165 for health insurance, $139 for general insurance, $118 for wastewater treatment, $114 for rate case expenses, $90 for accounting services and $80 for distribution system maintenance.  Other expenses increased by a net of $299.  The increase was partially offset by higher capitalized overhead of $70.

Interest expense on debt for 2014 decreased $157, or 3.0%, from $5,244 for 2013 to $5,087 for 2014.  The decrease was due to the bond refinancing in 2014 at a lower interest rate.

Allowance for funds used during construction increased $128, from $82 in 2013 to $210 in the 2014, due to a higher volume of eligible construction.

A gain on the sale of land of $316 was recorded in 2014 as a result of a PennDOT realignment project which included a portion of the Company's distribution facility property.

Other income (expenses), net for 2014 reflects increased expenses of $1,022 as compared to 2013.  The net change was primarily due to higher retirement expenses of approximately $611 caused by an 85 basis point decrease in the discount rate for our retirement programs, additional charitable contributions of $243 and lower earnings on life insurance policies of $138.  Other expenses aggregating approximately $30 increased as compared to 2013.

Income taxes for 2014 decreased $935, or 16.1%, compared to 2013 due to additional tax deductions under the IRS TPR. The Company's effective tax rate was 29.8% for 2014 and 37.6% for 2013.

Rate Developments

See Note 7 to the Company's financial statements included herein for a discussion of its rate developments.

The benefit from the implementation of the IRS TPR impacts the rate matters of the Company.  Earnings in excess of the regulatory benchmark prevented the collection of a distribution system improvement charge in 2015, and the Company anticipates it will do so again in 2016.  It also may lengthen the amount of time until filing the next rate increase request.  When the Company does file for its next rate increase, the PPUC will take into account the lower income taxes which resulted from the implementation of the IRS TPR, effectively reducing the amount of revenue required in future years and lowering the Company's rate increase request.

Page 20

Acquisitions

See Note 2 to the Company's financial statements included herein for a discussion of completed acquisitions included in financial results.

On October 8, 2013, the Company signed an agreement to purchase the wastewater assets of SYC WWTP, L.P. in Shrewsbury and Springfield Townships, York County, Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in the fourth quarter of 2016 at which time the Company will add approximately 30 commercial and industrial wastewater customers.

On July 16, 2015, the Company signed an agreement to purchase the water assets of Crestview Mobile Home Park in York County, Pennsylvania.  PPUC approval was granted in January 2016.  Completion of this acquisition is expected in March 2016, at which time the Company will begin serving approximately 120 new customers through an interconnection with its current distribution system.

On July 20, 2015, the Company signed an agreement to purchase the water assets of Westwood Mobile Home Park in York County, Pennsylvania.  Completion of this acquisition is contingent upon receiving approval from all required regulatory authorities.  The Company expects to begin serving approximately 200 new customers through an interconnection with its current distribution system in the second quarter of 2016.

On January 18, 2016, the Company signed an agreement to purchase the wastewater collection assets of West York Borough in York County, Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in the fourth quarter of 2016 at which time the Company will add approximately 1,700 wastewater customers.

In total, these acquisitions are expected to be immaterial to total company results.  The Company is also pursuing other bulk water contracts and water and wastewater acquisitions in and around its service territory to help offset any further declines in per capita water consumption and to grow its business.

Capital Expenditures

During 2015, the Company invested $13,844 in construction expenditures for routine items and further upgrades to its water treatment facilities as well as various replacements of infrastructure.  The Company replaced and relined approximately 42,000 feet of main in 2015.  In addition, the Company invested $352 in the acquisition of water systems during 2015.  The Company was able to fund construction expenditures and acquisitions using internally-generated funds, proceeds from its stock purchase plans, and proceeds from its long-term debt issue.  See Notes 4 and 5 to the Company's financial statements included herein.

The Company anticipates construction and acquisition expenditures for 2016 and 2017 of approximately $20,100 and $13,100, respectively, exclusive of any acquisitions not yet approved.  In addition to routine transmission and distribution projects, a portion of the anticipated 2016 and 2017 expenditures will be for additional main extensions, further upgrades to water and wastewater treatment facilities, an additional raw water pumping station and force main, the beginning of armoring one of the dams, and various replacements of infrastructure.  The Company intends to use primarily internally-generated funds for its anticipated 2016 and 2017 construction and fund the remainder through line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions (see Note 1 to the Company's financial statements included herein).  Customer advances and contributions are expected to account for less than 5% of funding requirements in 2016 and 2017.  Potential debt and equity offerings may be utilized if required.  The Company believes it will have adequate credit facilities and access to the capital markets, if necessary, during 2016, to fund anticipated construction and acquisition expenditures.

Page 21

Liquidity and Capital Resources

Cash

The Company manages its cash through a cash management account that is directly connected to a 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.  Likewise, if additional funds are needed beyond what is generated internally for payroll, to pay suppliers, or for debt service, funds are automatically borrowed under the line of credit.  The Company fully utilized its cash on hand after three separate significant cash outflows, specifically a $2,300 contribution to its pension trusts and April and July dividend payments, requiring the use of line of credit borrowings for a portion of the year ended December 31, 2015.  Each time, the Company was able to repay the borrowings, and it accumulated a cash balance of $2,879 as of December 31, 2015.  This was primarily due to proceeds from the long-term debt issue in July and lower income taxes paid than would have been required without the implementation of the IRS TPR.  The Company expects the cash balance to be fully utilized in 2016, after which the cash management facility is expected to provide the necessary liquidity and funding for the Company's operations, capital expenditures, acquisitions and potential buybacks of stock for the foreseeable future.

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 2015, the accounts receivable balance decreased despite an increase in revenue as the Company experienced an improvement in the timeliness of payments by its customers.  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.  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.  The improvement in the timeliness of payments by customers allowed the Company to reduce its allowance for doubtful accounts in 2015.

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 2015, the Company generated $20,710 internally as compared to $18,766 in 2014 and $18,438 in 2013.  The increase was primarily due to increases in net income, depreciation and lower taxes paid.

Credit Lines

Historically, the Company has borrowed $15,000 to $20,000 under its lines of credit before refinancing with long-term debt or equity capital.  As of December 31, 2015, the Company maintained unsecured lines of credit aggregating $29,000 with three banks at interest rates ranging from LIBOR plus 1.20% to LIBOR plus 1.50%.  The Company had no outstanding borrowings under any of its lines of credit as of December 31, 2015.  The Company plans to renew a $5,000 line of credit that expires in June 2016 under similar terms and conditions.

The Company has taken steps to manage the risk of reduced credit availability such as maintaining committed lines of credit that cannot be called on demand and obtaining a 2-year revolving maturity on its larger facilities.  There is no guarantee that the Company will be able to obtain sufficient lines of credit with favorable terms in the future.  In addition, if the Company is unable 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 lines of credit to meet financing needs throughout 2016.

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 4 to the Company's financial statements included herein for additional information regarding these restrictions.

Page 22

On July 23, 2015, the York County Industrial Development Authority (the "YCIDA") issued and sold $10,000 aggregate principal amount of YCIDA Exempt Facilities Revenue Bonds, Series 2015 (the "Series 2015 Bonds") for the Company's benefit pursuant to the terms of a trust indenture, dated as of July 1, 2015, between the YCIDA and Manufacturers and Traders Trust Company, as trustee.  The YCIDA then loaned the proceeds of the sale of the Series 2015 Bonds to the Company pursuant to a loan agreement dated as of July 1, 2015, between the Company and the YCIDA, which matches the debt service requirements on the Bonds.  The Bonds, and therefore the loan, bear interest at rates ranging from 4.00% to 4.50% per annum payable semiannually.  The Bonds have stated maturity dates of June 1 of the years 2029, 2032, 2035, 2038, 2042 and 2045 and are subject to optional and mandatory redemption provisions.  Amounts outstanding under the loan agreement are direct, unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting original issue discount and issuance costs, of approximately $9,500.  The net proceeds were used to redeem the PEDFA Series A 2004 Bonds and to fund a portion of the Company's 2015 capital expenditures.

The Company's debt (long-term debt plus current portion of long-term debt) as a percentage of the total capitalization, defined as total common stockholders' equity plus long-term debt (including current portion of long-term debt), was 44.5% as of December 31, 2015, compared with 44.8% as of December 31, 2014.  The Company will likely allow the debt percentage to trend upward until it approaches fifty percent before matching increasing debt with additional equity.  A debt to total capitalization ratio between forty-six and fifty percent has historically been acceptable to the PPUC in rate filings.  Due to its recent ability to generate and retain more cash internally, the Company has been able to keep its ratio below fifty percent.  See Note 4 to the Company's financial statements included herein for the details of its long-term debt outstanding as of December 31, 2015.

Income Taxes, Deferred Income Taxes and Uncertain Tax Positions

The Company has a substantial deferred income tax asset primarily due to the differences between the book and tax balances of the pension and deferred compensation plans.  The Company does not believe a valuation allowance is required due to the expected generation of future taxable income during the periods in which those temporary differences become deductible.

The Company has seen an increase in its deferred income tax liability amounts primarily as a result of the accelerated and bonus 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 and bonus depreciation or TPR.

The Company filed for a change in accounting method under the IRS TPR when its 2014 income tax return was filed in the third quarter of 2015.  The Company began adjusting its income tax provision for the effects of this change during the fourth quarter of 2014.  Under the change in accounting method, 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 was permitted to make this deduction for prior years (the "catch-up deduction") and each year going forward, beginning with 2014 (the "ongoing deduction").  As a result of the catch-up deduction, income tax benefits of $4,314 were deferred as a regulatory liability as of December 31, 2014.  The catch-up deduction resulted in a decrease in current income taxes payable and an increase to regulatory liabilities during 2014.  In 2015, upon final determination of the TPR amounts for its income tax return, the Company reclassified the portion of TPR related to dispositions to deferred taxes and deferred tax liabilities in compliance with the IRS regulations.  The Company will seek approval from the PPUC in its next rate filing to amortize the remaining catch-up deduction of $3,887, recorded as a regulatory liability.

As a result of the ongoing deduction, the net income tax benefits of $1,438 and $1,342 for the years ended December 31, 2015 and 2014, respectively, reduced income tax expense and flowed-through to net income.  The ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable.  Both the ongoing and catch-up deductions result in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.  The Company expects to continue to expense these asset improvements in the future, resulting in an effective tax rate of 28% to 32%.  The effective tax rate will vary depending on the level of eligible asset improvements that are placed in service each period.

Page 23

The Company has determined there are no uncertain tax positions that require recognition as of December 31, 2015.  See Note 3 to the Company's financial statements included herein for additional details regarding income taxes.

Common Stock

Common stockholders' equity as a percent of the total capitalization was 55.5% as of December 31, 2015, compared with 55.2% as of December 31, 2014.  The volume of share repurchases and line of credit borrowings, among other things, could reduce this percentage in the future.  It is the Company's intent to target a ratio between fifty and fifty-four percent.

Credit Rating

On March 20, 2015, Standard & Poor's affirmed the Company's credit rating at A-, with a stable outlook.  The Company's ability to maintain its credit rating depends, among other things, on adequate and timely rate relief, which it has been successful in obtaining, its ability to fund capital expenditures in a balanced manner using both debt and equity and its ability to generate cash flow.  In 2016, 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.

Dividends

During 2015, the Company's dividend payout ratios relative to net income and net cash provided by operating activities were 62.0% and 37.1%, respectively.  During 2014, the Company's dividend payout ratios relative to net income and net cash provided by operating activities were 64.8% and 39.4%, respectively.  During the fourth quarter of 2015, the Board of Directors increased the dividend by 4.0% from $0.1495 per share to $0.1555 per share per quarter.  This was the nineteenth consecutive annual dividend increase and the 200th consecutive year of paying dividends.

The Company's Board of Directors declared a dividend in the amount of $0.1555 per share at its February 2016 meeting. The dividend is payable on April 15, 2016 to shareholders of record as of February 29, 2016.  While the Company expects to maintain this dividend amount in 2016, 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 4 to the Company's financial statements included herein for restrictions on dividend payments.

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 ability of the Company to recover this increased investment in facilities is dependent upon future rate increases, which are subject to approval by the PPUC.  The Company can provide no assurances that its rate increases will be approved by the PPUC; and, if approved, the Company cannot guarantee that these rate increases will be granted in a timely or sufficient manner to cover the investments and expenses for which the rate increase was sought.

Page 24

Contractual Obligations

The following summarizes the Company's contractual obligations by period as of December 31, 2015:

	Payments due by period
	Total		Less than 1 Year		Years 2 and 3		Years 4 and 5		More than 5 Years
Long-term debt obligations (a)	$	87,542	$	44	$	12,088	$	17,530	$	57,880
Interest on long-term debt (b)		64,226		4,720		9,440		7,185		42,881
Purchase obligations (c)		2,031		1,818		142		71		-
Defined benefit obligations (d)		4,600		2,300		2,300		-		-
Deferred employee benefits (e)		5,314		277		522		445		4,070
Other deferred credits (f)		3,067		333		549		475		1,710
Total	$	166,780	$	9,492	$	25,041	$	25,706	$	106,541

(a)	Represents debt maturities including current maturities.  Included in the table is a potential payment of $12,000 in Year 2 on the variable rate bonds which would only be due if the bonds were unable to be remarketed.  There is currently no such indication of this happening.  If the bonds are successfully remarketed, they will be due in 2029.
(b)	Excludes interest on the $12,000 variable rate debt as these payments cannot be reasonably estimated.  The interest rate on this issue is reset weekly by the remarketing agent based on then current market conditions.  The interest rate as of December 31, 2015 was 0.02%.
(c)	Represents an approximation of open purchase orders at year end.
(d)	Represents contributions expected to be made to qualified defined benefit plans.  The contribution may increase if the minimum required contribution as calculated under Employee Retirement Income Security Act (ERISA) standards is higher than this amount.  The contribution is also dependent upon the amount recovered in rates charged to customers.  The amount of required contributions in year 3 and thereafter is not currently determinable.
(e)	Represents the obligations under the Company's Supplemental Retirement and Deferred Compensation Plans for executives and management.
(f)	Represents the estimated settlement payments to be made under the Company's interest rate swap contract.

In addition to these obligations, the Company makes refunds on Customers' Advances for Construction over a specific period of time based on operating revenues related to developer-installed water mains or as new customers are connected to and take service from such mains.  The refund amounts are not included in the above table because the timing cannot be accurately estimated.  Portions of these refund amounts are payable annually through 2026 and amounts not paid by the contract expiration dates become non-refundable and are transferred to Contributions in Aid of Construction.

See Note 9 to the Company's financial statements included herein for a discussion of its commitments.

Page 25

Critical Accounting Estimates

The methods, estimates and judgments the Company used in applying its accounting policies have a significant impact on the results reported in its financial statements. The Company's accounting policies require management to make subjective judgments because of the need to make estimates of matters that are inherently uncertain.  The Company's most critical accounting estimates include: regulatory assets and liabilities, revenue recognition, accounting for its pension plans, and income taxes.

Regulatory Assets and Liabilities

Generally accepted accounting principles define accounting standards for companies whose rates are established by or are subject to approval by an independent third-party regulator.  In accordance with the accounting standards, the Company defers costs and credits on its balance sheet as regulatory assets and liabilities when it is probable that these costs and credits will be recognized in the rate-making process in a period different from when the costs and credits were incurred.  These deferred amounts are then recognized in the statement of income in the period in which they are reflected in customer rates.  If the Company later finds that these assets and liabilities cannot be included in rate-making, they are adjusted appropriately.  See Note 1 for additional details regarding regulatory assets and liabilities.

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.  Estimates are based on average daily usage for those particular customers.  The unbilled revenue amount is recorded as a current asset on the balance sheet.  Actual results could differ from these estimates and would result in operating revenues being adjusted in the period in which the actual usage is known.  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 continued to use a compensation increase of 3% in 2015.  In 2016, compensation increases of 2.5% to 3.0% are expected to be used.

The Company adopted a new mortality table in 2014, the RP-2014, using the white collar table for the administrative and general plan and the blue collar table for the union plan.  Using the new mortality table increased the life expectancy of pension plan participants, resulting in a significant increase to the pension benefit obligation, and ultimately, a decline in the Company's funded status of the plans.  In 2015, the Social Security Administration released new underlying data creating an Adjusted RP-2014 mortality table.  In addition, a new mortality improvement scale was released, MP-2015, which the Company also adopted.  These changes partially offset the increase in the pension benefit obligation realized in 2014.

The Company selected its December 31, 2015 and 2014 discount rates based on the Citigroup Pension Liability Index.  This index uses the Citigroup spot rates for durations out to 30 years and matches them to expected disbursements from the plan over the long term.  The Company believes this index most appropriately matches its pension obligations.  The present values of the Company's future pension obligations were determined using a discount rate of 4.20% at December 31, 2015 and 3.80% at December 31, 2014.

Page 26

Adopting a new mortality table that represents a decrease in life expectancy and choosing a higher discount rate normally decreases the amount of pension expense and the corresponding liability.  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.  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.

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 used 7% as its estimate of expected return on assets in both 2015 and 2014.  The Company plans to reduce the expected return in 2016, as estimates of asset returns over the next several years are expected to be weaker than they have been in the past.  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.

Lower discount rates and underperformance of assets could cause future required contributions and expense to increase substantially.  If this were to happen, the Company would have to consider changes to its pension plan benefits and possibly request additional recovery of expenses through increased rates charged to customers.  See Note 6 to the Company's financial statements included herein for additional details regarding the pension plans.

Income Taxes

The Company estimates the amount of income tax payable or refundable for the current year and the deferred income tax liabilities and assets that results from estimating temporary differences resulting from the treatment of certain items, such as depreciation, for tax and financial statement reporting.  Generally, these differences result in the recognition of a deferred tax asset or liability on the balance sheet and require the Company to make judgments regarding the probability of the ultimate tax impact of the various transactions entered into.  Based on these judgments, it may require tax reserves or valuation allowances on deferred tax assets to reflect the expected realization of future tax benefits.  The Company believes its determination of what qualifies as a repair expense tax deduction versus a capital cost as it relates to the IRS TPR ongoing and catch-up deductions is consistent with the regulations.  Actual income taxes could vary from these estimates and changes in these estimates could increase income tax expense in the period that these changes in estimates occur.

Other critical accounting estimates are discussed in the Significant Accounting Policies Note to the Financial Statements.

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. The Company uses a derivative financial instrument, an interest rate swap agreement discussed in Note 4 to the financial statements included herein, for risk management purposes.  The Company does not engage in trading or other risk management activities, does not use other derivative financial instruments for any purpose, has no material lease obligations, no guarantees and does not have material transactions involving related parties.

Impact of Recent Accounting Pronouncements

See Note 1 to the Company's financial statements included herein for a discussion on the effect of new accounting pronouncements.

Page 27

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The Company's operations are exposed to market risks primarily as a result of changes in interest rates under its lines of credit.  As of February 2016, the Company has unsecured lines of credit with three banks having a combined maximum availability of $29,000.  The first line of credit, in the amount of $13,000, is a committed line of credit with a revolving 2-year maturity (currently May 2017), and carries an interest rate of LIBOR plus 1.20%.  The second line of credit, in the amount of $11,000, is a committed line of credit, which matures in May 2017 and carries an interest rate of LIBOR plus 1.25%.  The third line of credit, in the amount of $5,000, is a committed line of credit, which matures in June 2016 and carries an interest rate of LIBOR plus 1.50%.  The Company had no outstanding borrowings under any of its lines of credit as of December 31, 2015.  Other than lines of credit, the Company has long-term fixed rate debt obligations that are not subject to interest rate risk as discussed in Note 4 to the financial statements included herein, and a variable rate PEDFA loan agreement, which is subject to minimal market risk, described below.

In May 2008, the PEDFA issued $12,000 aggregate principal amount of PEDFA Exempt Facilities Revenue Bonds, Series A (the "Bonds").  The proceeds of this bond issue were used to refund the $12,000 PEDFA Exempt Facilities Revenue Bonds, Series B of 2004 which were refunded due to bond insurer downgrading issues.  The PEDFA then loaned the proceeds to the Company pursuant to a variable interest rate loan agreement with a maturity date of October 1, 2029.  In connection with the loan agreement, the Company retained its interest rate swap agreement whereby the Company exchanged its floating rate obligation for a fixed rate obligation.  The purpose of the interest rate swap is to manage the Company's exposure to fluctuations in the interest rate.  If the interest rate swap agreement works as intended, the receive rate on the swap should approximate the variable rate the Company pays on the PEDFA Series A Bond Issue, thereby minimizing its risk.  See Note 4 to the Company's financial statements included herein.

The table below provides information about the Company's financial instruments that are sensitive to changes in interest rates, including long-term debt obligations and the interest rate swap.  For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates.  For the interest rate swap, the table presents the undiscounted net payments and weighted average interest rates by expected maturity dates.  Notional amounts are used to calculate the contractual payments to be exchanged under the contract.  Weighted average variable rates are based on implied forward rates in the yield curve at the reporting date.

	Expected Maturity Date
Liabilities	2016	2017	2018	2019	2020	Thereafter	Total	Fair Value
Long-term debt:
Fixed Rate	$44	$44	$44	$11,030	$6,500	$57,880	$75,542	$90,000
Average interest rate	1.00%	1.00%	1.00%	9.89%	10.05%	5.14%	6.25%
Variable Rate	-	$12,000	-	-	-	-	$12,000	$12,000
Interest rate	0.02%	0.02%	-	-	-	-	0.02%

Page 28

	Expected Maturity Date
Interest Rate Derivatives	2016	2017	2018	2019	2020	Thereafter	Total	Fair Value
Interest Rate Swap – Notional Value $12,000								$2,511
Variable to Fixed *	$333	$289	$260	$245	$230	$1,710	$3,067
Average pay rate	3.16%	3.16%	3.16%	3.16%	3.16%	3.16%	3.16%
Average receive rate	0.38%	0.75%	1.01%	1.11%	1.23%	1.55%	1.31%
*Represents undiscounted net payments.

The variable rate portion of the liabilities section of the table includes the $12,000 variable rate loan potentially due in 2017, as the underlying bonds could be tendered at any time.  If all of the bonds were tendered and could not be remarketed, the earliest that the Company would have to buy them back would be fourteen months from the date of notification.  As of the date of this report, there had been no such notification.  If the bonds are able to be remarketed as intended for the term of the bonds, the loan will be due in October 2029.  The interest rate of 0.02% on the $12,000 variable rate loan represents the rate paid to bondholders for the PEDFA Series A issue at December 31, 2015.  This rate is used for 2016 and 2017, but it may not be indicative of the actual rate.

Other than the interest rate swap, the Company has no other derivative instruments used for any purpose, no additional financial instruments with significant credit risk, and no material exposure to currency or commodity risk.

Item 8. Financial Statements and Supplementary Data.

Page 29

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of

The York Water Company

We have audited the accompanying balance sheets of The York Water Company (the "Company") as of December 31, 2015 and 2014, and the related statements of income, common stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2015. In connection with our audits of the financial statements, we also have audited the financial statement schedule listed in the Index at Item 15(a) 2. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The York Water Company as of December 31, 2015 and 2014, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respect, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), The York Water Company's internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 8, 2016 expressed an unqualified opinion.

/s/Baker Tilly Virchow Krause, LLP

Baker Tilly Virchow Krause, LLP

York, Pennsylvania

March 8, 2016

Page 30

THE YORK WATER COMPANY

Balance Sheets

(In thousands of dollars, except per share amounts)

	Dec. 31, 2015			Dec. 31, 2014
ASSETS
UTILITY PLANT, at original cost	$	329,415		$	316,525
Plant acquisition adjustments		(3,724	)		(3,522	)
Accumulated depreciation		(64,271	)		(59,809	)
Net utility plant		261,420			253,194
OTHER PHYSICAL PROPERTY,
net of accumulated depreciation of $329 in 2015 and $286 in 2014		769			765
CURRENT ASSETS:
Cash and cash equivalents		2,879			1,488
Restricted cash		-			7
Accounts receivable, net of reserves of $315 in 2015 and $325 in 2014		3,535			3,991
Unbilled revenues		2,614			2,377
Recoverable income taxes		1,049			957
Materials and supplies inventories, at cost		771			771
Prepaid expenses		729			584
Deferred income taxes		215			1,058
Total current assets		11,792			11,233
OTHER LONG-TERM ASSETS:
Deferred debt expense		2,743			2,573
Notes receivable		255			266
Deferred regulatory assets		32,996			32,614
Other assets		3,516			3,694
Total other long-term assets		39,510			39,147
Total Assets	$	313,491		$	304,339

The accompanying notes are an integral part of these statements.

Page 31

THE YORK WATER COMPANY

Balance Sheets

(In thousands of dollars, except per share amounts)

	Dec. 31, 2015		Dec. 31, 2014
STOCKHOLDERS' EQUITY AND LIABILITIES
COMMON STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 12,812,377 shares in 2015 and 12,830,521 shares in 2014	$	77,317	$	77,556
Retained earnings		31,753		27,007
Total common stockholders' equity		109,070		104,563
PREFERRED STOCK, authorized 500,000 shares, no shares issued		-		-
LONG-TERM DEBT, excluding current portion		87,261		84,842
COMMITMENTS		-		-
CURRENT LIABILITIES:
Current portion of long-term debt		44		43
Accounts payable		1,772		1,589
Dividends payable		1,708		1,647
Accrued compensation and benefits		1,174		1,078
Accrued interest		976		1,027
Other accrued expenses		523		546
Total current liabilities		6,197		5,930
DEFERRED CREDITS:
Customers' advances for construction		7,500		10,712
Deferred income taxes		50,495		46,024
Deferred employee benefits		11,079		13,727
Other deferred credits		6,959		7,489
Total deferred credits		76,033		77,952
Contributions in aid of construction		34,930		31,052
Total Stockholders' Equity and Liabilities	$	313,491	$	304,339

The accompanying notes are an integral part of these statements.

Page 32

THE YORK WATER COMPANY

Statements of Income

(In thousands of dollars, except per share amounts)

	Year Ended December 31,
	2015			2014			2013
OPERATING REVENUES:
Residential	$	29,682		$	29,079		$	26,796
Commercial and industrial		13,822			13,267			12,299
Other		3,585			3,554			3,288
		47,089			45,900			42,383
OPERATING EXPENSES:
Operation and maintenance		8,066			7,968			7,350
Administrative and general		9,082			8,812			7,406
Depreciation and amortization		6,151			5,932			5,744
Taxes other than income taxes		1,129			1,111			1,122
		24,428			23,823			21,622
Operating income		22,661			22,077			20,761
OTHER INCOME (EXPENSES):
Interest on debt		(5,053	)		(5,087	)		(5,244	)
Allowance for funds used during construction		206			210			82
Gain on sale of land		-			316			-
Other income (expenses), net		(585	)		(1,155	)		(133	)
		(5,432	)		(5,716	)		(5,295	)
Income before income taxes		17,229			16,361			15,466
Income taxes		4,740			4,877			5,812
Net Income	$	12,489		$	11,484		$	9,654
Basic Earnings Per Share	$	0.97		$	0.89		$	0.75
Cash Dividends Declared Per Share	$	0.6040		$	0.5788		$	0.5580

The accompanying notes are an integral part of these statements.

Page 33

THE YORK WATER COMPANY

Statements of Common Stockholders' Equity

(In thousands of dollars, except per share amounts)

For the Years Ended December 31, 2015, 2014 and 2013

	Common Stock Shares			Common Stock Amount			Retained Earnings			Total
Balance, December 31, 2012		12,918,633		$	79,299		$	20,526		$	99,825
Net income		-			-			9,654			9,654
Dividends		-			-			(7,214	)		(7,214	)
Retirement of common stock		(94,414	)		(1,772	)		-			(1,772	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		155,062			3,018			-			3,018
Balance, December 31, 2013		12,979,281			80,545			22,966			103,511
Net income		-			-			11,484			11,484
Dividends		-			-			(7,443	)		(7,443	)
Retirement of common stock		(282,570	)		(5,692	)		-			(5,692	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		133,810			2,703			-			2,703
Balance, December 31, 2014		12,830,521			77,556			27,007			104,563
Net income		-			-			12,489			12,489
Dividends		-			-			(7,743	)		(7,743	)
Retirement of common stock		(121,012	)		(2,546	)		-			(2,546	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		102,868			2,307			-			2,307
Balance, December 31, 2015		12,812,377		$	77,317		$	31,753		$	109,070

The accompanying notes are an integral part of these statements.

Page 34

THE YORK WATER COMPANY

Statements of Cash Flows

(In thousands of dollars, except per share amounts)

	Year Ended December 31,
	2015			2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	12,489		$	11,484		$	9,654
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of land		-			(316	)		-
Depreciation and amortization		6,151			5,932			5,744
Increase in deferred income taxes		2,270			4,753			1,939
Other		189			199			213
Changes in assets and liabilities:
(Increase) decrease in accounts receivable and unbilled revenues		(73	)		(632	)		11
Increase in recoverable income taxes		(92	)		(957	)		-
Increase in materials and supplies, prepaid expenses, regulatory and other assets		(2,339	)		(11,438	)		(1,056	)
Increase in accounts payable, accrued compensation and benefits, accrued expenses, deferred employee benefits, and other deferred credits		2,166			11,502			306
Increase (decrease) in accrued interest and taxes		(51	)		(1,761	)		1,627
Net cash provided by operating activities		20,710			18,766			18,438
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions, including debt portion of allowance for funds used during construction of $115 in 2015, $117 in 2014 and $46 in 2013		(13,844	)		(14,139	)		(9,852	)
Acquisitions of water and wastewater systems		(352	)		(369	)		(28	)
Proceeds from sale of land		-			346			-
Decrease in compensating balance		-			-			500
Decrease in notes receivable		11			40			32
Net cash used in investing activities		(14,185	)		(14,122	)		(9,348	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Customers' advances for construction and contributions in aid of construction		1,117			638			733
Repayments of customer advances		(447	)		(419	)		(313	)
Proceeds of long-term debt issues		14,301			14,880			-
Debt issuance costs		(298	)		(506	)		-
Repayments of long-term debt		(11,886	)		(14,923	)		(47	)
Repurchase of common stock		(2,546	)		(5,692	)		(1,772	)
Issuance of common stock		2,307			2,703			3,018
Dividends paid		(7,682	)		(7,402	)		(7,156	)
Net cash used in financing activities		(5,134	)		(10,721	)		(5,537	)
Net change in cash and cash equivalents		1,391			(6,077	)		3,553
Cash and cash equivalents at beginning of period		1,488			7,565			4,012
Cash and cash equivalents at end of period	$	2,879		$	1,488		$	7,565
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	4,985		$	5,007		$	5,198
Income taxes		2,155			2,808			1,921
Supplemental schedule of non-cash investing and financing activities:
Accounts payable includes $720 in 2015, $833 in 2014 and $974 in 2013 for the construction of utility plant.

The accompanying notes are an integral part of these statements.

Page 35

Notes to Financial Statements

(In thousands of dollars, except per share amounts)

1. Significant Accounting Policies

The primary business of The York Water Company is to impound, purify and distribute water.  The Company also operates two wastewater collection and treatment systems.  The Company operates within its franchised territory located in York and Adams Counties, Pennsylvania, and is subject to regulation by the Pennsylvania Public Utility Commission, or PPUC.

The following summarizes the significant accounting policies employed by The York Water Company.

Utility Plant and Depreciation

The cost of additions includes contracted cost, direct labor and fringe benefits, materials, overhead and, for certain utility plant, allowance for funds used during construction.  In accordance with regulatory accounting requirements, water and wastewater systems acquired are recorded at estimated original cost of utility plant when first devoted to utility service and the applicable depreciation is recorded to accumulated depreciation.  The difference between the estimated original cost less applicable accumulated depreciation, and the purchase price and acquisition costs is recorded as an acquisition adjustment within utility plant as permitted by the PPUC.  At December 31, 2015 and 2014, utility plant includes a net credit acquisition adjustment of $3,724 and $3,522, respectively.  For those amounts approved by the PPUC, the net acquisition adjustment is being amortized over the remaining life of the respective assets. Certain amounts are still awaiting approval from the PPUC before amortization will commence.  Amortization amounted to $58 in 2015, $54 in 2014, and $50 in 2013.

Upon normal retirement of depreciable property, the estimated or actual cost of the asset is credited to the utility plant account, and such amounts, together with the cost of removal less salvage value, are charged to the reserve for depreciation.  To the extent the Company recovers cost of removal or other retirement costs through rates after the retirement costs are incurred, a regulatory asset is reported.  Gains or losses from abnormal retirements are reflected in income currently.

The straight-line remaining life method is used to compute depreciation on utility plant cost, exclusive of land and land rights.  Annual provisions for depreciation of transportation and mechanical equipment included in utility plant are computed on a straight-line basis over the estimated service lives.  Such provisions are charged to clearing accounts and apportioned therefrom to operating expenses and other accounts in accordance with the Uniform System of Accounts as prescribed by the PPUC.

The Company charges to maintenance expense the cost of repairs and replacements and renewals of minor items of property.  Maintenance of transportation equipment is charged to clearing accounts and apportioned therefrom in a manner similar to depreciation.  The cost of replacements, renewals and betterments of units of property is capitalized to the utility plant accounts.

Page 36

The following remaining lives are used for financial reporting purposes:

	December 31,				Approximate range
Utility Plant Asset Category	2015		2014		of remaining lives
Mains and accessories	$	170,991	$	164,627	10 – 83 years
Services, meters and hydrants		66,267		63,479	19 – 55 years
Operations structures, reservoirs and water tanks		44,739		43,654	12 – 38 years
Pumping and treatment equipment		27,664		25,616	3 – 34 years
Office, transportation and operating equipment		11,725		11,216	3 – 21 years
Land and other non-depreciable assets		3,172		3,166		-
Utility plant in service		324,558		311,758
Construction work in progress		4,857		4,767		-
Total Utility Plant	$	329,415	$	316,525

The effective rate of depreciation was 2.24% in 2015, 2.26% in 2014, and 2.28% in 2013 on average utility plant, net of customers' advances and contributions. Larger depreciation provisions resulting from allowable accelerated methods are deducted for tax purposes.

Cash and Cash Equivalents

For the purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents except for those instruments earmarked to fund construction expenditures or repay long-term debt.

The Company periodically maintains cash balances in major financial institutions in excess of the federally insured limit by the Federal Deposit Insurance Corporation (FDIC).  The Company has not experienced any losses and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Restricted Cash

The Company served as the custodian for an escrow account that was used to rehabilitate a neighborhood within the service territory of the Company.  The deposits made by various community organizations were classified as restricted cash on the balance sheets of the Company.  The project was completed and the remaining cash was disbursed in 2015.

In 2012, the Company had a compensating balance requirement for one of its lines of credit which was recorded as Restricted Cash – compensating balance.  This requirement was removed in 2013.

Accounts Receivable

Accounts receivable are stated at outstanding balances, less a reserve for doubtful accounts.  The reserve for doubtful accounts is established through provisions charged against income.  Accounts deemed to be uncollectible are charged against the reserve and subsequent recoveries, if any, are credited to the reserve.  The reserve for doubtful accounts is maintained at a level considered adequate to provide for losses that can be reasonably anticipated.  Management's periodic evaluation of the adequacy of the reserve is 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.  This evaluation is inherently subjective.  Unpaid balances remaining after the stated payment terms are considered past due.

Revenue Recognition

Operating revenues include amounts billed to water customers on a cycle basis and unbilled amounts based on actual and estimated usage from the latest meter reading to the end of the accounting period.  Operating revenues also include amounts billed to wastewater customers as either a flat monthly fee or a metered rate based on water consumption.  The metered wastewater revenue includes actual and estimated usage from the latest meter reading to the end of the accounting period.

Materials and Supplies Inventories

Materials and supplies inventories are stated at cost.  Costs are determined using the average cost method.

Page 37

Deferred Debt Expense

Deferred debt expense is amortized on a straight-line basis over the term of the related debt.

Notes Receivable

Notes receivable are recorded at cost and represent amounts due from various municipalities for construction of water mains in their particular municipality.  Management, considering current information and events regarding the borrowers' ability to repay their obligations, considers a note to be impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the note agreement.  When a note is considered to be impaired, the carrying value of the note is written down.  The amount of the impairment is measured based on the present value of expected future cash flows discounted at the note's effective interest rate.

Regulatory Assets and Liabilities

The Company is subject to the provisions of generally accepted accounting principles regarding rate-regulated entities.  The accounting standards provide for the recognition of regulatory assets and liabilities as allowed by regulators for costs or credits that are reflected in current customer rates or are considered probable of being included in future rates.  The regulatory assets or liabilities are then relieved as the cost or credit is reflected in rates.  Regulatory assets represent costs that are expected to be fully recovered from customers in future rates while regulatory liabilities represent amounts that are expected to be refunded to customers in future rates.  These deferred costs have been excluded from the Company's rate base and, therefore, no return is being earned on the unamortized balances.

Regulatory assets and liabilities are comprised of the following:

	December 31,				Remaining Recovery
	2015		2014		Periods
Assets
Income taxes	$	18,389	$	15,800	Various
Postretirement benefits		9,819		12,493	5 – 10 years
Unrealized swap losses		2,481		2,561	1 – 14 years
Utility plant retirement costs		2,247		1,561	5 years
Service life study expenses		3		5	2 years
Rate case filing expenses		57		194	1 years
		32,996		32,614
Liabilities
IRS TPR catch-up deduction		3,887		4,314	Not yet known
Income taxes		776		806	1 – 50 years
	$	4,663	$	5,120

The regulatory asset for income taxes include (a) deferred state income taxes related primarily to differences between book and tax depreciation expense, (b) deferred income taxes related to the differences that arise between specific asset improvement costs capitalized for book purposes and deducted as a repair expense for tax purposes, and (c) deferred income taxes associated with the gross-up of revenues related to the differences.  These assets are recognized for ratemaking purposes on a cash or flow-through basis and will be recovered in rates as they reverse.

Postretirement benefits include the difference between contributions and deferred pension expense and the underfunded status of the pension plans.  The underfunded status represents the difference between the projected benefit obligation and the fair market value of the assets.  This asset is expected to be recovered in future years as additional contributions are made or market conditions improve.  The recovery period is dependent on contributions made to the plans, plan asset performance and the discount rate used to value the obligations.  The period is estimated at between 5 and 10 years.

Page 38

The Company uses regulatory accounting treatment to defer the mark-to-market unrealized gains and losses on its interest rate swap to reflect that the gain or loss is included in the ratemaking formula when the transaction actually settles.  The value of the swap as of the balance sheet date is recorded as part of other deferred credits.  Realized gains or losses on the swap will be recorded as interest expense in the statement of income over its remaining life of 14 years.

Utility plant retirement costs, including cost of removal, represents costs already incurred which are expected to be recovered over a five-year period in rates, through depreciation expense.  Service life study and rate case filing expenses are deferred and amortized over their remaining lives of two and one years, respectively.

The regulatory liability for the Internal Revenue Service, or IRS, tangible property regulations, or TPR, catch-up deduction represents the tax benefits realized on the Company's 2014 income tax return for qualifying capital expenditures made prior to 2014.  In 2015, upon final determination of the TPR amounts for its income tax return, the Company reclassified the portion of TPR related to dispositions to deferred taxes and deferred tax liabilities in compliance with the IRS regulations.  The Company will seek approval from the PPUC in its next rate filing to amortize the remaining catch-up deduction.

The regulatory liability for income taxes relates mainly to deferred investment tax credits, and additionally to deferred taxes related to postretirement death benefits and bad debts.  These liabilities will be given back to customers in rates as tax deductions occur over the next 1-50 years.

Regulatory liabilities are part of other accrued expenses and other deferred credits on the balance sheets.

Other Assets

Other assets consist mainly of the cash value of life insurance policies held as an investment by the Company for reimbursement of costs and benefits associated with its supplemental retirement and deferred compensation programs.

Customers' Advances for Construction

Customer advances are cash payments from developers, municipalities, customers or builders for construction of utility plant, and are refundable upon completion of construction, as operating revenues are earned.  If the Company loans funds for construction to the customer, the refund amount is credited to the note receivable rather than paid out in cash.  After all refunds to which the customer is entitled are made, any remaining balance is transferred to contributions in aid of construction.  From 1986 to 1996 when customer advances were taxable income to the Company, additional funds were collected from customers to cover the taxes.  Those funds were recorded as a liability within Customer Advances for Construction and are being amortized as deferred income over the tax life of the underlying assets.

Contributions in Aid of Construction

Contributions in Aid of Construction is composed of (i) direct, non-refundable contributions from developers, customers or builders for construction of water infrastructure and (ii) customer advances that have become non-refundable.  Contributions in aid of construction are deducted from the Company's rate base, and therefore, no return is earned on property financed with contributions.  The PPUC requires that contributions received remain on the Company's balance sheets indefinitely as a long-term liability.

Interest Rate Swap Agreement

The Company is exposed to certain risks relating to its ongoing business operations.  The primary risk managed by using derivative instruments is interest rate risk.  The Company utilizes an interest rate swap agreement to convert its variable-rate debt to a fixed rate.  Interest rate swaps are contracts in which a series of interest rate cash flows are exchanged over a prescribed period.  The notional amount on which the interest payments are based is not exchanged.  The Company has designated the interest rate swap agreement as a cash flow hedge, classified as a financial derivative used for non-trading activities.

The accounting standards regarding accounting for derivatives and hedging activities require companies to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheets.  In accordance with the standards, the interest rate swap is recorded on the balance sheets in other deferred credits at fair value.

Page 39

The Company uses regulatory accounting treatment rather than hedge accounting to defer the unrealized gains and losses on its interest rate swap.  Instead of the effective portion being recorded as other comprehensive income and the ineffective portion being recognized in earnings, the entire unrealized swap value is recorded as a regulatory asset.  Based on current ratemaking treatment, the Company expects the gains and losses to be recognized in rates and in interest expense as the swap settlements occur.  Swap settlements are recorded in the income statement with the hedged item as interest expense.  Swap settlements resulted in the reclassification from regulatory assets to interest expense of $366 in 2015, $368 in 2014, and $366 in 2013.  The overall swap result was a (gain) loss of $285 in 2015, $1,318 in 2014, and $(830) in 2013.  During the twelve months ending December 31, 2016, the Company expects to reclassify $328 (before tax) from regulatory assets to interest expense.

The interest rate swap will expire on October 1, 2029.

Income Taxes

Certain income and expense items are accounted for in different time periods for financial reporting than for income tax reporting purposes.

Deferred income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  To the extent such income taxes increase or decrease future rates, an offsetting regulatory asset or liability has been recorded.

Investment tax credits have been deferred and are being amortized to income over the average estimated service lives of the related assets.  As of December 31, 2015 and 2014, deferred investment tax credits amounted to $696 and $734, respectively.

The Company filed for a change in accounting method under the IRS TPR when its 2014 income tax return was filed in 2015.  The Company began adjusting its income tax provision for the effects of this change during the fourth quarter of 2014.  Under the change in accounting method, 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 is permitted to make this deduction for prior years (the "catch-up deduction") and each year going forward, beginning with 2014 (the "ongoing deduction").  The ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable.  The catch-up deduction resulted in a decrease in current income taxes payable and an increase to regulatory liabilities.  The Company will seek approval from the PPUC in its next rate filing to amortize the remaining catch-up deduction recorded as a regulatory liability.  Both the ongoing and catch-up deductions resulted in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.

Allowance for Funds Used During Construction

Allowance for funds used during construction (AFUDC) represents the estimated cost of funds used for construction purposes during the period of construction.  These costs are reflected as non-cash income during the construction period and as an addition to the cost of plant constructed. AFUDC includes the net cost of borrowed funds and a rate of return on other funds. The PPUC approved rate of 10.04% was applied for 2014 and 2013.  The Company applied a blended rate in 2015 due to its partial use of tax-exempt financing for 2015 construction projects.  The tax-exempt borrowing rates of 4.00% - 4.50% were applied to those expenditures so financed, whereas the approved 10.04% rate was applied to the remainder of 2015 expenditures.  AFUDC is recovered through water and wastewater rates as utility plant is depreciated.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Page 40

Impact of Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), which replaces the existing guidance in Accounting Standard Codification 840 – Leases.  This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases.  Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability.  For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense.  This ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years.  The Company is currently assessing the impact of the adoption of the standard on its financial position, results of operations and cash flows.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes.  This ASU requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update.  This ASU is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years.  Early adoption is permitted, and the Company intends to adopt this ASU in the first quarter of 2016.  The Company does not expect the adoption of this standard to have any impact on its results of operations or cash flows, but will result in current deferred income tax asset being presented net with the noncurrent deferred income tax liability on the balance sheets.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs.  This ASU clarifies the required presentation of debt issuance costs.  The standard requires that debt issuance costs be presented on the balance sheet as a direct reduction from the carrying amount of the recognized debt liability, consistent with the treatment of debt discounts.  Amortization of debt issuance costs is to be reported as interest expense.  The recognition and measurement guidance for debt issuance costs are not affected by the standard.  This ASU is effective for fiscal years beginning after December 15, 2015.  Early adoption is permitted.  The Company does not expect the adoption of this standard to have any impact on its results of operations or cash flows, but will result in debt issuance costs being presented as a direct reduction from the carrying amount of debt liabilities on the balance sheets.

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements.  The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements.  Further, an entity must provide certain disclosures if there is substantial doubt about the entity's ability to continue as a going concern.  The ASU is effective for fiscal years ending on or after December 15, 2016 and interim periods thereafter.  The Company will comply with these assessments, but does not expect the adoption of this accounting standard to have any impact on its financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers.  This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605—Revenue Recognition and most industry-specific guidance throughout the Codification.  The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferring the effective date of this amendment for public companies by one year to fiscal years beginning after December 15, 2017.  Early adoption is permitted for fiscal years beginning after December 15, 2016, the original effective date.  The standard permits the use of either a retrospective or cumulative effect transition method.  The Company has not yet selected a transition method and is in the process of assessing the impact of the adoption of the standard on its financial position, results of operations and cash flows.

Page 41

2. Acquisitions

On March 7, 2013, the Company completed the acquisition of the Windy Brae Mobile Home Park water assets of Barkas, Inc. in York County, Pennsylvania.  The Company began operating the existing system through an interconnection with its current distribution system on March 11, 2013.  The acquisition resulted in the addition of approximately 135 new water customers with purchase price and acquisition costs of approximately $29, which is less than the depreciated original cost of the assets.  The Company recorded a negative acquisition adjustment of approximately $45 and will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On February 7, 2014, the Company completed the acquisition of the wastewater facilities of East Prospect Borough Authority in York County, Pennsylvania. The Company began operating the existing collection and treatment facilities on February 8, 2014. The acquisition resulted in the addition of approximately 400 wastewater customers with purchase price and acquisition costs of approximately $281, which is less than the depreciated original cost of the assets. The Company recorded a negative acquisition adjustment of approximately $667 as of December 31, 2014.  In 2015, the Company paid additional acquisition costs of approximately $2 resulting in a decrease of the negative acquisition adjustment to $665.  The Company will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On May 30, 2014, the Company completed the acquisition of the water assets of Forest Lakes Water Association in York County, Pennsylvania. The Company began operating the existing system through an interconnection with its current distribution system on June 2, 2014. The acquisition resulted in the addition of approximately 70 new water customers with purchase price and acquisition costs of approximately $18, which is less than the depreciated original cost of the assets. The Company recorded a negative acquisition adjustment of approximately $9 as of December 31, 2014.  In 2015, the Company paid additional acquisition costs of approximately $2 resulting in a decrease of the negative acquisition adjustment to $7.  The Company will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On November 20, 2014, the Company completed the acquisition of the water assets of Lincoln Estates Mobile Home Park in Adams County, Pennsylvania. The Company began operating the existing system as a satellite location on November 24, 2014. The acquisition resulted in the addition of approximately 200 new water customers with purchase price and acquisition costs of approximately $70, which is less than the depreciated original cost of the assets.  In 2015, the Company recorded a negative acquisition adjustment of approximately $77 and will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On April 9, 2015, the Company completed the acquisition of the water assets of The Meadows community in Adams County, Pennsylvania.  The Company began operating the existing system as a satellite location on April 13, 2015.  The acquisition resulted in the addition of approximately 90 new water customers with purchase price and acquisition costs of approximately $63, which is less than the depreciated original cost of the assets.  The Company recorded a negative acquisition adjustment of approximately $159 and will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On April 22, 2015, the Company completed the acquisition of the water assets of the Paradise Homes Community in York County, Pennsylvania.  The Company began operating the existing system through an interconnection with its current distribution system on April 27, 2015.  The acquisition resulted in the addition of approximately 90 new water customers with purchase price and acquisition costs of approximately $36, which is less than the depreciated original cost of the assets.  The Company recorded a negative acquisition adjustment of approximately $28 and will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On October 19, 2015, the Company completed the acquisition of the water assets of the Newberry Farms Mobile Home Park in York County, Pennsylvania.  The Company began operating the existing system through an interconnection with its current distribution system on October 22, 2015.  The acquisition resulted in the addition of approximately 160 new water customers with purchase price and acquisition costs of approximately $116.

Page 42

On November 2, 2015, the Company completed the acquisition of Margaretta Mobile Home Park in York County, Pennsylvania.  The Company began operating the existing system through an interconnection with its current distribution system on November 3, 2015.  The acquisition resulted in the addition of approximately 65 new water customers with purchase price and acquisition costs of approximately $133.

3. Income Taxes

The provisions for income taxes consist of:

	2015			2014			2013
Federal current	$	1,873		$	96		$	2,720
State current		597			28			1,153
Federal deferred		2,131			3,757			1,907
State deferred		177			1,035			71
Federal investment tax credit, net of current utilization		(38	)		(39	)		(39	)
Total income taxes	$	4,740		$	4,877		$	5,812

A reconciliation of the statutory Federal tax provision (34%) to the total provision follows:

	2015			2014			2013
Statutory Federal tax provision	$	5,858		$	5,563		$	5,258
State income taxes, net of Federal benefit		511			702			808
IRS TPR ongoing deduction		(1,438	)		(1,342	)		-
Tax-exempt interest		(37	)		(37	)		(34	)
Amortization of investment tax credit		(38	)		(39	)		(39	)
Cash value of life insurance		71			15			(32	)
Domestic production deduction		(190	)		-			(154	)
Other, net		3			15			5
Total income taxes	$	4,740		$	4,877		$	5,812

The Company filed for a change in accounting method under the IRS TPR when its 2014 income tax return was filed in the third quarter of 2015.  The Company began adjusting its income tax provision for the effects of this change during the fourth quarter of 2014.  Under the change in accounting method, 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 was permitted to make this deduction for prior years (the "catch-up deduction") and each year going forward, beginning with 2014 (the "ongoing deduction").  As a result of the catch-up deduction, income tax benefits of $4,314 were deferred as a regulatory liability as of December 31, 2014.  The catch-up deduction resulted in a decrease in current income taxes payable and an increase to regulatory liabilities during 2014.  In 2015, upon final determination of the TPR amounts for its income tax return, the Company reclassified the portion of TPR related to dispositions to deferred taxes and deferred tax liabilities in compliance with the IRS regulations.  The Company will seek approval from the PPUC in its next rate filing to amortize the remaining catch-up deduction of $3,887 recorded as a regulatory liability.  As a result of the ongoing deduction, the net income tax benefits of $1,438 and $1,342 for the years ended December 31, 2015 and 2014, respectively, reduced income tax expense and flowed-through to net income.  The ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable.  Both the ongoing and catch-up deductions result in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.

Page 43

The tax effects of temporary differences between book and tax balances that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2015 and 2014 are summarized in the following table:

	2015			2014
Deferred tax assets:
Reserve for doubtful accounts	$	128		$	132
Compensated absences		221			209
Deferred compensation		1,465			1,452
Customers' advances and contributions		1			8
Deferred taxes associated with the gross-up of revenues necessary to return, in rates, the effect of temporary differences		122			123
Pensions		3,099			4,185
Tax loss carryover		-			836
Contribution carryover		147			183
Other costs deducted for book, not for tax		51			49
Total deferred tax assets		5,234			7,177
Deferred tax liabilities:
Accelerated depreciation		36,210			34,000
Basis differences from IRS TPR		7,196			5,917
Investment tax credit		413			436
Deferred taxes associated with the gross-up of revenues necessary to recover, in rates, the effect of temporary differences		7,271			6,210
Tax effect of pension regulatory asset		3,986			5,071
Other costs deducted for tax, not for book		438			509
Total deferred tax liabilities		55,514			52,143
Net deferred tax liability	$	50,280		$	44,966
Reflected on balance sheets as:
Current deferred tax asset	$	(215	)	$	(1,058	)
Noncurrent deferred tax liability		50,495			46,024
Net deferred tax liability	$	50,280		$	44,966

Page 44

The Company has a contribution carryover of $363.  If not used, this carryover will expire in 2019.

No valuation allowance was required for deferred tax assets as of December 31, 2015 and 2014.  In assessing the soundness of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.  Based upon expected future taxable income and the current regulatory environment, management believes it is more likely than not that the Company will realize the benefits of these deductible differences.

The Company determined that there were no uncertain tax positions meeting the recognition and measurement test of the accounting standards recorded in the years that remain open for review by taxing authorities, which are 2012 through 2014 for both federal and state income tax returns.  The Company has not yet filed tax returns for 2015, but has not taken any new position in its 2015 income tax provision.

The Company's policy is to recognize interest and penalties related to income tax matters in other expenses.  There were no interest or penalties for the years ended December 31, 2015, 2014, and 2013.

4. Long-Term Debt and Short-Term Borrowings

Long-term debt as of December 31, 2015 and 2014 is summarized in the following table:

	2015			2014
4.05% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series A, due 2016	$	-		$	2,350
5.00% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series A, due 2016		-			4,950
10.17% Senior Notes, Series A, due 2019		6,000			6,000
9.60% Senior Notes, Series B, due 2019		5,000			5,000
1.00% Pennvest Loan, due 2019		162			205
10.05% Senior Notes, Series C, due 2020		6,500			6,500
8.43% Senior Notes, Series D, due 2022		7,500			7,500
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series 2008A, due 2029		12,000			12,000
4.75% York County Industrial Development Authority Revenue Bonds, Series 2006, due 2036		10,500			10,500
4.50% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038		14,880			14,880
5.00% Monthly Senior Notes, Series 2010A, due 2040		15,000			15,000
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045		10,000			-
Total long-term debt		87,542			84,885
Less discount on issuance of long-term debt		(237	)		-
Less current maturities		(44	)		(43	)
Long-term portion	$	87,261		$	84,842

Page 45

Payments due by year:

2016		2017		2018		2019		2020
$	44	$	12,044	$	44	$	11,030	$	6,500

Payments due in 2017 include potential payments of $12,000 on the variable rate bonds (due 2029) which would only be payable if all of the bonds were tendered and could not be remarketed.  There is currently no such indication of this happening.

Fixed Rate Long-Term Debt

On July 23, 2015, the York County Industrial Development Authority (the "YCIDA") issued and sold $10,000 aggregate principal amount of YCIDA Exempt Facilities Revenue Bonds, Series 2015 (the "Series 2015 Bonds") for the Company's benefit pursuant to the terms of a trust indenture, dated as of July 1, 2015, between the YCIDA and Manufacturers and Traders Trust Company, as trustee.  The YCIDA then loaned the proceeds of the sale of the Series 2015 Bonds to the Company pursuant to a loan agreement dated as of July 1, 2015, between the Company and the YCIDA, which matches the debt service requirements on the Bonds.  The Bonds, and therefore the loan, bear interest at rates ranging from 4.00% to 4.50% per annum payable semiannually.  The Bonds have stated maturity dates of June 1 of the years 2029, 2032, 2035, 2038, 2042 and 2045 and are subject to optional and mandatory redemption provisions.  One such provision allows the Company to redeem all or a portion of the bonds on or after June 1, 2025.  Amounts outstanding under the loan agreement are direct, unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting original issue discount and issuance costs, of approximately $9,500.  The net proceeds were used to redeem the PEDFA Series A 2004 Bonds and to fund a portion of the Company's 2015 capital expenditures.

On April 25, 2014, the Pennsylvania Economic Development Financing Authority (the "PEDFA") issued $14,880 aggregate principal amount of PEDFA Exempt Facilities Revenue Refunding Bonds, Series 2014 (the "Series 2014 Bonds") for the Company's benefit pursuant to the terms of a trust indenture, dated as of April 1, 2014, between the PEDFA and Manufacturers and Traders Trust Company, as trustee. The PEDFA then loaned the proceeds of the offering of the Series 2014 Bonds to the Company pursuant to a loan agreement, dated as of April 1, 2014, between the Company and the PEDFA.  The loan bears interest at a rate of 4.50% payable semiannually.  The maturity date of the loan is November 1, 2038.  Amounts outstanding under the loan agreement are direct, unsecured and unsubordinated obligations of the Company.  The proceeds of the loan were used to redeem the 6.00% PEDFA Exempt Facilities Revenue Refunding Bonds, Series 2008B.  The refinancing will reduce interest expense and lower the overall effective debt rate going forward.

The Series 2014 Bonds contain both optional and special redemption provisions. Under the optional provisions, the Company can redeem all or a portion of the bonds on or after May 1, 2019. Under the special provisions, representatives of deceased beneficial owners of the bonds have the right to request redemption prior to the stated maturity of all or part of their interest in the bonds beginning on or after May 1, 2014. The Company is not obligated to redeem any individual interest exceeding $25, or aggregate interest exceeding $300, in any annual period.  To date, no bonds that met the special provisions have been tendered for redemption.

Variable Rate Long-Term Debt

On May 7, 2008, the PEDFA issued $12,000 aggregate principal amount of PEDFA Exempt Facilities Revenue Refunding Bonds, Series A of 2008 (the "Series A Bonds") for the Company's benefit pursuant to the terms of a trust indenture, dated as of May 1, 2008, between the PEDFA and Manufacturers and Traders Trust Company, as trustee.  The PEDFA then loaned the proceeds of the offering of the Series A Bonds to the Company pursuant to a loan agreement, dated as of May 1, 2008, between the Company and the PEDFA.  The loan agreement provides for a $12,000 loan with a maturity date of October 1, 2029.  Amounts outstanding under the loan agreement are the Company's direct general obligations.  The proceeds of the loan were used to redeem the PEDFA Exempt Facilities Revenue Bonds, Series B of 2004 (the "2004 Series B Bonds").  The 2004 Series B Bonds were redeemed because the bonds were tendered and could not be remarketed due to the downgrade of the bond insurer's credit rating.

Page 46

Borrowings under the loan agreement bear interest at a variable rate as determined by PNC Capital Markets, as remarketing agent, on a periodic basis elected by the Company, which has currently elected that the interest rate be determined on a weekly basis. The remarketing agent determines the interest rate based on the current market conditions in order to determine the lowest interest rate which would cause the Series A Bonds to have a market value equal to the principal amount thereof plus accrued interest thereon.  The variable interest rate under the loan agreement averaged 0.06% in 2015 and 0.07%  in 2014.  As of December 31, 2015 and 2014, the interest rate was 0.02% and 0.05%, respectively.

The holders of the $12,000 Series A Bonds may tender their bonds at any time.  When the bonds are tendered, they are subject to an annual remarketing agreement, pursuant to which a remarketing agent attempts to remarket the tendered bonds according to the terms of the indenture.  In order to keep variable interest rates down and to enhance the marketability of the Series A Bonds, the Company entered into a Reimbursement, Credit and Security Agreement with PNC Bank, National Association ("the Bank") dated as of May 1, 2008.  This agreement provides for a direct pay letter of credit issued by the Bank to the trustee for the Series A Bonds.  The Bank is responsible for providing the trustee with funds for the timely payment of the principal and interest on the Series A Bonds and for the purchase price of the Series A Bonds that have been tendered or deemed tendered for purchase and have not been remarketed.  The Company's responsibility is to reimburse the Bank the same day as regular interest payments are made, and within fourteen months for the purchase price of tendered bonds that have not been remarketed.  The reimbursement period for the principal is immediate at maturity, upon default by the Company, or if the Bank does not renew the Letter of Credit.  The current expiration date of the Letter of Credit is June 30, 2017.  It is reviewed annually for a potential extension of the expiration date.

The Company may elect to have the Series A Bonds redeemed, in whole or in part, on any date that interest is payable for a redemption price equal to the principal amount thereof plus accrued interest to the date of redemption.  The Series A Bonds are also subject to mandatory redemption for the same redemption price in the event that the IRS determines that the interest payable on the Series A Bonds is includable in gross income of the holders of the bonds for federal tax purposes.

Interest Rate Swap Agreement

In connection with the issuance of the PEDFA 2004 Series B Bonds, the Company entered into an interest rate swap agreement with a counterparty, in the notional principal amount of $12,000.  The Company elected to retain the swap agreement for the 2008 Series A Bonds.  Interest rate swap agreements derive their value from underlying interest rates.  These transactions involve both credit and market risk.  The notional amounts are amounts on which calculations, payments, and the value of the derivative are based.  Notional amounts do not represent direct credit exposure.  Direct credit exposure is limited to the net difference between the calculated amounts to be received and paid, if any.  Such difference, which represents the fair value of the swap, is reflected on the Company's balance sheets.  See Note 10 for additional information regarding the fair value of the swap.

The interest rate swap will terminate on the maturity date of the 2008 Series A Bonds (which is the same date as the maturity date of the loan under the loan agreement), unless sooner terminated pursuant to its terms.  In the event the interest rate swap terminates prior to the maturity date of the 2008 Series A Bonds, either the Company or the swap counterparty may be required to make a termination payment to the other based on market conditions at such time.  The Company is exposed to credit-related losses in the event of nonperformance by the counterparty.  The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures, and does not expect the counterparty to default on its obligations.  Notwithstanding the terms of the swap agreement, the Company is ultimately obligated for all amounts due and payable under the loan agreement.

The interest rate swap agreement contains provisions that require the Company to maintain a credit rating of at least BBB- with Standard & Poor's.  On March 20, 2015, Standard & Poor's affirmed the Company's credit rating at A-, with a stable outlook.  If the Company's rating were to fall below this rating, it would be in violation of these provisions, and the counterparty to the derivative could request immediate payment if the derivative was in a liability position.  The Company's interest rate swap was in a liability position as of December 31, 2015.  If a violation was triggered on December 31, 2015, the Company would have been required to pay the counterparty approximately $2,683.

Page 47

The Company's interest rate swap agreement provides that it pay the counterparty a fixed interest rate of 3.16% on the notional amount of $12,000. In exchange, the counterparty pays the Company a floating interest rate (based on 59% of the U.S. Dollar one-month LIBOR rate) on the notional amount.  The floating interest rate paid to the Company is intended, over the term of the swap, to approximate the variable interest rate on the loan agreement and the interest rate paid to bondholders, thereby managing its exposure to fluctuations in prevailing interest rates.  The Company's net payment rate on the swap averaged 3.06% in 2015 and 3.07% in 2014.

As of December 31, 2015, there was a negative spread of 18 basis points between the variable rate paid to bondholders and the variable rate received from the swap counterparty, which equated to an overall effective rate of 2.98% (including variable interest and swap payments).  As of December 31, 2014, there was a negative spread of 5 basis point which equated to an overall effective rate of 3.11% (including variable interest and swap payments).

Short-Term Borrowings

As of December 31, 2015, the Company maintained unsecured lines of credit aggregating $29,000 with three banks.  The first line of credit, in the amount of $13,000, is a committed line of credit with a revolving 2-year maturity (currently May 2017), and carries an interest rate of LIBOR plus 1.20%.  The second line of credit, in the amount of $11,000, is a committed line of credit, which matures in May 2017 and carries an interest rate of LIBOR plus 1.25%.  This line of credit had a compensating balance requirement of $500 which was eliminated in 2013.  The third line of credit, in the amount of $5,000, is a committed line of credit, which matures in June 2016 and carries an interest rate of LIBOR plus 1.50%.  The Company had no outstanding borrowings under any of its lines of credit as of December 31, 2015 and 2014.

Debt Covenants and Restrictions

The terms of the debt agreements carry certain covenants and limit in some cases the Company's ability to borrow additional funds, to prepay its borrowings and include certain restrictions with respect to declaration and payment of cash dividends and acquisition of the Company's stock.  Under the terms of the most restrictive agreements, the Company cannot borrow in excess of 60% of its utility plant, and cumulative payments for dividends and acquisition of stock since December 31, 1982 may not exceed $1,500 plus net income since that date.  As of December 31, 2015, none of the earnings retained in the business are restricted under these provisions.  The Company's Pennvest Loan is secured by $800 of receivables.  Other than this loan, the Company's debt is unsecured.

The Company's lines of credit require it to maintain a minimum equity to total capitalization ratio (defined as the sum of equity plus funded debt) and a minimum interest coverage ratio (defined as net income plus interest expense plus income tax expense divided by interest expense).  As of December 31, 2015, the Company was in compliance with these covenants.

5. Common Stock and Earnings Per Share

Earnings per share is based upon the weighted average number of shares outstanding of 12,831,687 in 2015, 12,879,912 in 2014, and 12,928,040 in 2013.  The Company does not have dilutive securities outstanding.

Under the employee stock purchase plan, all full-time employees who have been employed at least ninety consecutive days may purchase shares of the Company's common stock limited to 10% of gross compensation.  The purchase price is 95% of the fair market value (as defined).  Shares issued during 2015, 2014 and 2013 were 7,417, 7,431 and 6,711, respectively.  As of December 31, 2015, 80,711 authorized shares remain unissued under the plan.

The Company has a Dividend Reinvestment and Direct Stock Purchase and Sale Plan, which is available to both current shareholders and the general public.  Certain restrictions apply.  Purchases are made weekly at 100% of the stock's fair market value, as defined in the Prospectus contained in Amendment No. 1 to Securities and Exchange Commission Form S-3, filed by the Company on June 26, 2008.

Under the optional dividend reinvestment portion of the plan, holders of the Company's common stock may purchase additional shares instead of receiving cash dividends.  The purchase price is 95% of the fair market value (as defined).

Page 48

Shares issued under the 2008 Dividend Reinvestment and Direct Stock Purchase and Sale Plan during 2013 were 112,163.  No shares were issued under this Plan after October 30, 2013.

On October 1, 2013, the Company filed a Registration Statement on Form S-3 with the SEC to authorize 500,000 shares to be issued under the new Prospectus for the Dividend Reinvestment and Direct Stock Purchase and Sale Plan.  Other provisions of the plan were left substantially unchanged.  The Registration Statement was declared effective by the SEC on October 31, 2013.  Shares issued in 2015, 2014 and 2013 under the new Prospectus were 95,451, 126,379 and 36,188, respectively.  As of December 31, 2015, 241,982 authorized shares remain unissued under the plan.

On March 11, 2013, the Board of Directors authorized a share repurchase program granting the Company authority to repurchase up to 1,200,000 shares of the Company's common stock from time to time.  Under the stock repurchase program, the Company may repurchase shares in the open market or through privately negotiated transactions.  The Company may suspend or discontinue the repurchase program at any time.  During 2015, 2014 and 2013, the Company repurchased and retired 121,012, 282,570 and 94,414 shares, respectively.  As of December 31, 2015, 702,004 shares remain available for repurchase.

6. Employee Benefit Plans

Pensions

The Company maintains a general and administrative and a union-represented defined benefit pension plan covering all of its employees hired prior to May 1, 2010.  Employees hired after May 1, 2010 are eligible for an enhanced 401(k) plan rather than a defined benefit plan.  The benefits under the defined benefit plans are based upon years of service and compensation near retirement.  The Company amended its defined benefit pension plans in 2014, generally limiting the years of eligible service under the plans to 30 years. The Company's funding policy is to contribute annually the amount permitted by the PPUC to be collected from customers in rates, but in no case less than the minimum Employee Retirement Income Security Act (ERISA) required contribution.

The following table sets forth the plans' funded status as of December 31, 2015 and 2014.  The measurement of assets and obligations of the plans is as of December 31, 2015 and 2014.

Obligations and Funded Status At December 31	2015			2014
Change in Benefit Obligation
Pension benefit obligation beginning of year	$	40,884		$	32,054
Service cost		1,166			952
Interest cost		1,515			1,444
Actuarial (gain) loss		(2,873	)		7,762
Plan amendments		-			(210	)
Benefit payments		(1,223	)		(1,118	)
Pension benefit obligation end of year		39,469			40,884
Change in Plan Assets
Fair value of plan assets beginning of year		30,575			27,102
Actual return on plan assets		183			2,409
Employer contributions		2,300			2,182
Benefits paid		(1,223	)		(1,118	)
Fair value of plan assets end of year		31,835			30,575
Funded Status of Plans at End of Year	$	(7,634	)	$	(10,309	)

Page 49

The accounting standards require that the funded status of defined benefit pension plans be fully recognized on the balance sheets.  They also call for the unrecognized actuarial gain or loss, the unrecognized prior service cost and the unrecognized transition costs to be adjustments to shareholders' equity (accumulated other comprehensive income).  Due to a rate order granted by the PPUC, the Company is permitted under the accounting standards to defer the charges to accumulated other comprehensive income as a regulatory asset.  Management believes these costs will be recovered in future rates charged to customers.  The liability for the funded status of the Company's pension plans is recorded in "Deferred employee benefits" on its balance sheets.

In 2015, the plans recognized an actuarial gain due to the 40 basis point increase in the discount rate and the adoption of an adjusted RP-2014 mortality table and improvement scale which lessened the impact of the RP-2014 mortality table.  In 2014, the actuarial loss grew substantially due to the 85 basis point decline in the discount rate, and a change in mortality tables to the RP-2014 (White Collar and Blue Collar) which increased the life expectancy of plan participants.  The Company uses the corridor method to amortize actuarial gains and losses.  Gains and losses over 10% of the greater of pension benefit obligation or the market value of assets are amortized over the average future service of plan participants expected to receive benefits.

Changes in plan assets and benefit obligations recognized in regulatory assets are as follows:

	2015			2014
Net (gain) loss arising during the period	$	(826	)	$	7,339
Recognized net actuarial loss		(705	)		(126	)
Recognized prior service credit (cost)		13			(197	)
Total changes in regulatory asset during the year	$	(1,518	)	$	7,016

Amounts recognized in regulatory assets that have not yet been recognized as components of net periodic benefit cost consist of the following at December 31:

	2015			2014
Net loss	$	10,447		$	11,978
Prior service (credit) cost		(127	)		(140	)
Regulatory asset	$	10,320		$	11,838

Components of Net Periodic Benefit Cost are as follows:

	2015			2014			2013
Service cost	$	1,166		$	952		$	1,188
Interest cost		1,515			1,444			1,280
Expected return on plan assets		(2,229	)		(1,986	)		(1,644	)
Amortization of loss		705			126			698
Amortization of prior service (credit) cost		(13	)		(13	)		10
Rate-regulated adjustment		1,156			1,659			61
Net periodic benefit cost	$	2,300		$	2,182		$	1,593

The rate-regulated adjustment set forth above is required in order to reflect pension expense for the Company in accordance with the method used in establishing water rates.  The Company is permitted by rate order of the PPUC to expense pension costs to the extent of contributions and defer the remaining expense to regulatory assets to be collected in rates at a later date as additional contributions are made.  During 2015, the deferral decreased $1,156.

Page 50

The estimated costs for the defined benefit pension plans relating to the December 31, 2015 balance sheet that will be amortized from regulatory assets into net periodic benefit cost over the next fiscal year are as follows:

Net loss	$	554
Net prior service credit		(13	)
		541

The Company plans to contribute $2,300 to the plans in 2016.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid in each of the next five years and the subsequent five years in the aggregate:

2016			2017			2018			2019			2020				2021-2025
	$	1,591		$	1,592		$	1,725		$	1,862		$	1,875	$	10,785

The following tables show the projected benefit obligation, the accumulated benefit obligation and the fair value of plan assets as of December 31:

	2015		2014
Projected benefit obligation	$	39,469	$	40,884
Fair value of plan assets		31,835		30,575

	2015		2014
Accumulated benefit obligation	$	36,302	$	37,500
Fair value of plan assets		31,835		30,575

Weighted-average assumptions used to determine benefit obligations at December 31:

	2015			2014
Discount rate		4.20	%		3.80	%
Rate of compensation increase		2.50% - 3.00	%		3.00	%

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:

	2015			2014			2013
Discount rate		3.80	%		4.65	%		3.75	%
Expected long-term return on plan assets		7.00	%		7.00	%		7.00	%
Rate of compensation increase		3.00	%		3.00	%		3.00	%

The selected long-term rate of return on plan assets was primarily based on the asset allocation of the plan's assets (approximately 50% to 70% equity securities and 30% to 50% fixed income securities).  Analysis of the historic returns of these asset classes and projections of expected future returns were considered in setting the long-term rate of return.

The investment objective of the Company's defined benefit pension plans is that of Growth and Income.  The weighted-average target asset allocations are 50% to 70% equity securities, 30% to 50% fixed income securities, and 0% to 10% reserves (cash and cash equivalents).  Within the equity category, the Company's target allocation is approximately 60-95% large cap, 0-25% mid cap, 0-10% small cap, 0-25% International Developed Nations, and 0-10% International Emerging Nations.  Within the fixed income category, its target allocation is approximately 15-55% U.S. Treasuries, 0–22% Federal Agency securities, 0-40% corporate bonds, 15-55% mortgage-backed securities, 0-20% international, and 0-20% high yield bonds.  The Company's investment performance objectives over a three to five year period are to exceed the annual rate of inflation as measured by the Consumer Price Index by 3%, and to exceed the annualized total return of specified benchmarks applicable to the funds within the asset categories.

Page 51

Further guidelines within equity securities include: (1) holdings in any one company cannot exceed 5% of the portfolio; (2) a minimum of 20 individual stocks must be included in the domestic stock portfolio; (3) a minimum of 30 individual stocks must be included in the international stock portfolio; (4) equity holdings in any one industry cannot exceed 20-25% of the portfolio; and (5) only U.S.-denominated currency securities are permitted.

Further guidelines for fixed income securities include: (1) fixed income holdings in a single issuer are limited to 5% of the portfolio; (2) acceptable investments include money market securities, U.S. Government and its agencies and sponsored entities' securities, mortgage-backed and asset-backed securities, corporate securities and mutual funds offering high yield bond portfolios; (3) purchases must be limited to investment grade or higher; (4) non-U.S. dollar denominated securities are not permissible; and (5) high risk derivatives are prohibited.

The fair values of the Company's pension plan assets at December 31, 2015 and 2014 by asset category and fair value hierarchy level are as follows.  The majority of the valuations are based on quoted prices on active markets (Level 1), with the remaining valuations based on broker/dealer quotes, active market makers, models, and yield curves (Level 2).

	Total Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)
Asset Category	2015		2014		2015		2014		2015		2014
Cash and Money Market Funds (a)	$	1,205	$	1,064	$	1,205	$	1,064	$	-	$	-
Equity Securities:
Common Equity Securities (b)		2,686		3,031		2,686		3,031		-		-
Equity Mutual Funds (c)		18,017		16,380		18,017		16,380		-		-
Fixed Income Securities:
U.S. Treasury Obligations		833		831		-		-		833		831
Corporate and Foreign Bonds (d)		3,427		1,620		-		-		3,427		1,620
Fixed Income Mutual Funds (e)		5,667		7,649		5,667		7,649		-		-
Total Plan Assets	$	31,835	$	30,575	$	27,575	$	28,124	$	4,260	$	2,451

(a) The portfolios are designed to keep approximately three months of distributions in immediately available funds.  The Company was more heavily-weighted in cash as of December 31, 2015 due to market volatility.

(b) This category includes investments in U.S. common stocks and foreign stocks trading in the U.S. widely distributed among consumer discretionary, consumer staples, healthcare, information technology, financial services, materials, industrials and  energy. The individual stocks are primarily large cap stocks which track with the S&P 500 with the exception of $447 in 2014 which was invested in York Water Company common stock.  In 2015, the Company repurchased the company stock previously held in the pension portfolio.

(c) This category currently includes a majority of investments in closed-end mutual funds as well as domestic equity mutual funds and international mutual funds which give the portfolio exposure to mid and large cap index funds as well as international diversified index funds.

(d) This category currently includes only U.S. corporate bonds and notes widely distributed among consumer discretionary, consumer staples, healthcare, information technology and financial services.

(e) This category includes fixed income investments in mutual funds which include government, corporate and mortgage securities of both the U.S. and other countries.  The mortgage-backed securities and non-U.S. corporate and sovereign investments add further diversity to the fixed income portion of the portfolio.

Page 52

Defined Contribution Plan

The Company has a savings plan pursuant to the provisions of section 401(k) of the Internal Revenue Code.  For employees hired before May 1, 2010, this plan provides for elective employee contributions of up to 15% of compensation and Company matching contributions of 100% of the participant's contribution, up to a maximum annual Company contribution of $2.8 for each employee.

Employees hired after May 1, 2010 are entitled to an enhanced feature of the plan.  This feature provides for elective employee contributions of up to 15% of compensation and Company matching contributions of 100% of the participant's contribution, up to a maximum of 4% of the employee's compensation.  In addition, the Company will make an annual contribution of $1.2 to each employee's account whether or not they defer their own compensation.  Employees eligible for this enhanced 401(k) plan feature are not eligible for the defined benefit plans.  As of December 31, 2015, nineteen employees were participating in the enhanced feature of the plan.  The Company's contributions to both portions of the plan amounted to $262 in 2015, $239 in 2014, and $222 in 2013.

Deferred Compensation

The Company has non-qualified deferred compensation and supplemental retirement agreements with certain members of management. The future commitments under these arrangements are offset by corporate-owned life insurance policies.  At December 31, 2015 and 2014, the present value of the future obligations was approximately $3,608 and $3,576, respectively.  The insurance policies included in other assets had a total cash value of approximately $3,378 and $3,567 at December 31, 2015 and 2014, respectively.  The Company's net (income) expenses under the plans amounted to $380 in 2015, $658 in 2014 and $(91) in 2013.

Other

The Company has a retiree life insurance program which pays the beneficiary of a retiree $2 upon the retiree's death.  At December 31, 2015 and 2014, the present value of the future obligations was approximately $98 and $110, respectively.  There is no trust or insurance covering this future liability, instead the Company will pay these benefits out of its general assets.  The Company's net (income) expenses under the plan amounted to $(4) in 2015, $25 in 2014 and $(14) in 2013.

7. Rate Matters

From time to time, the Company files applications for rate increases with the PPUC and is granted rate relief as a result of such requests.  The most recent rate request was filed by the Company on May 29, 2013 and sought an increase in rates designed to produce additional annual water revenues of $7,116 and additional annual wastewater revenues of $28.  Effective February 28, 2014, the PPUC authorized an increase in water rates designed to produce approximately $4,972 in additional annual revenues, and an increase in wastewater rates for the Asbury Pointe subdivision to produce approximately $28 in additional annual revenues.

The PPUC permits water utilities to collect a distribution system improvement charge (DSIC).  The DSIC allows the Company to add a charge to customers' bills for qualified replacement costs of certain infrastructure without submitting a rate filing.  This surcharge mechanism typically adjusts periodically based on additional qualified capital expenditures completed or anticipated in a future period.  The DSIC is capped at 5% of base rates, and is reset to zero when new base rates that reflect the costs of those additions become effective or when a utility's earnings exceed a regulatory benchmark.  The surcharge reset to zero when the new base rates took effect on February 28, 2014.  In 2015, the Company's earnings exceeded the regulatory benchmark, preventing the collection of a DSIC.  The DSIC provided revenues in 2015, 2014 and 2013 of $0, $283 and $1,445, respectively.  The DSIC is subject to audit by the PPUC.

Page 53

8. Notes Receivable and Customers' Advances for Construction

The Company entered agreements with three municipalities to extend water service into previously formed water districts.  The Company loaned funds to the municipalities to cover the costs related to the projects.  The municipalities concurrently advanced these funds back to the Company in the form of customers' advances for construction.  The municipalities are required by enacted ordinances to charge application fees and water revenue surcharges (fees) to customers connected to the system, which are remitted to the Company.  The note principal and the related customer advance are reduced periodically as operating revenues are earned by the Company from customers connected to the system and refunds of advances are made.  There is no due date for the notes or expiration date for the advances.  Two of the notes receivable were fully repaid in 2015.

The Company has recorded interest income of $110 in 2015, $107 in 2014 and $101 in 2013.  The interest rate on the note outstanding at December 31, 2015 is 7.5%.

Included in the accompanying balance sheets at December 31, 2015 and 2014 were the following amounts related to these projects.

	2015		2014
Notes receivable, including interest	$	255	$	266
Customers' advances for construction		310		626

The Company has other customers' advances for construction totaling $7,190 and $10,086 at December 31, 2015 and 2014, respectively.

9. Commitments

Based on its capital budget, the Company anticipates construction and acquisition expenditures for 2016 and 2017 of approximately $20,100 and $13,100, respectively, exclusive of any acquisitions not yet approved.  The Company plans to finance ongoing capital expenditures with internally-generated funds, borrowings against the Company's lines of credit, proceeds from the issuance of common stock under its dividend reinvestment and direct stock purchase and sale plan and ESPP, potential common stock or debt issues and customer advances.

As of December 31, 2015, the Company employed 107 full time people, including 37 under union contract.  The current contract was ratified in March 2014 and expires on April 30, 2017.

The Company is involved in certain legal and administrative proceedings before various courts and governmental agencies concerning water service and other matters.  The Company expects that the ultimate disposition of these proceedings will not have a material effect on the Company's financial position, results of operations and cash flows.

10. Fair Value of Financial Instruments

The accounting standards regarding fair value measurements establish a fair value hierarchy which indicates the extent to which inputs used in measuring fair value are observable in the market.  Level 1 inputs include quoted prices for identical instruments and are the most observable.  Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, commodity rates and yield curves.  Level 3 inputs are not observable in the market and include management's own judgments about the assumptions market participants would use in pricing the asset or liability.

The Company has recorded its interest rate swap liability at fair value in accordance with the standards.  The liability is recorded under the caption "Other deferred credits" on the balance sheets.  The table below illustrates the fair value of the interest rate swap as of the end of the reporting period.

Page 54

Description	December 31, 2015	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,511	$2,511

Fair values are measured as the present value of all expected future cash flows based on the LIBOR-based swap yield curve as of the date of the valuation.  These inputs to this calculation are deemed to be Level 2 inputs.  The balance sheet carrying value reflects the Company's credit quality as of December 31, 2015.  The rate used in discounting all prospective cash flows anticipated to be made under this swap reflects a representation of the yield to maturity for 30-year debt on utilities rated A- as of December 31, 2015.  The use of the Company's credit quality resulted in a reduction in the swap liability of $172.  The fair value of the swap reflecting the Company's credit quality as of December 31, 2014 is shown in the table below.

Description	December 31, 2014	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,592	$2,592

The carrying amount of current assets and liabilities that are considered financial instruments approximates fair value as of the dates presented.  The Company's long-term debt (including current maturities and excluding the discount on issuance of long-term debt), with a carrying value of $87,542 at December 31, 2015, and $84,885 at December 31, 2014, had an estimated fair value of approximately $102,000 and $100,000 at December 31, 2015 and 2014, respectively.  The estimated fair value of debt was calculated using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration and risk profile.  These inputs to this calculation are deemed to be Level 2 inputs.  The Company recognized its credit rating in determining the yield curve, and did not factor in third party credit enhancements including bond insurance on the 2006 York County Industrial Development Authority issue and the letter of credit on the 2008 PEDFA Series A issue.

Customers' advances for construction and notes receivable have carrying values at December 31, 2015 of $7,500 and $255, respectively.  At December 31, 2014, customers' advances for construction and notes receivable had carrying values of $10,712 and $266, respectively.  The relative fair values of these amounts cannot be accurately estimated since the timing of future payment streams is dependent upon several factors, including new customer connections, customer consumption levels and future rate increases.

11. Taxes Other than Income Taxes

The following table provides the components of taxes other than income taxes:

	2015		2014		2013
Regulatory Assessment	$	242	$	218	$	220
Property		334		339		364
Payroll, net of amounts capitalized		510		494		462
Capital Stock		42		59		75
Other		1		1		1
Total taxes other than income taxes	$	1,129	$	1,111	$	1,122

Page 55

12. Selected Quarterly Financial Data (Unaudited)

	First		Second		Third		Fourth		Year
2015
Operating revenues	$	11,209	$	11,895	$	12,368	$	11,617	$	47,089
Operating income		5,134		5,682		6,353		5,492		22,661
Net income		2,528		2,925		3,520		3,516		12,489
Basic earnings per share		0.20		0.22		0.28		0.27		0.97
Dividends declared per share		0.1495		0.1495		0.1495		0.1555		0.6040
2014
Operating revenues	$	10,571	$	11,768	$	12,062	$	11,499	$	45,900
Operating income		4,758		5,800		6,092		5,427		22,077
Net income *		2,111		2,757		3,065		3,551		11,484
Basic earnings per share		0.16		0.22		0.23		0.28		0.89
Dividends declared per share		0.1431		0.1431		0.1431		0.1495		0.5788
* Fourth quarter net income includes a tax benefit of $1,342 for the full year 2014 due to the implementation of the IRS TPR.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of the Company's President and Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report.  Based upon this evaluation, the Company's President and Chief Executive Officer along with the Chief Financial Officer concluded that the Company's disclosure controls and procedures as of the end of the period covered by this report are effective such that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to the Company's management, including the President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

No change in the Company's internal control over financial reporting occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Page 56

Management's Report on Internal Control Over Financial Reporting

Management of The York Water Company (the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company's internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management evaluated the Company's internal control over financial reporting as of December 31, 2015.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework).  As a result of this assessment and based on the criteria in the COSO framework, management has concluded that, as of December 31, 2015, the Company's internal control over financial reporting was effective.

Page 57

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of

The York Water Company

We have audited The York Water Company's internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The York Water Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on The York Water Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, The York Water Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the balance sheets and the related statements of income, common stockholders' equity, and cash flows of The York Water Company, and our report dated March 8, 2016 expressed an unqualified opinion.

/s/Baker Tilly Virchow Krause, LLP

Baker Tilly Virchow Krause, LLP

York, Pennsylvania

March 8, 2016

Page 58

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Directors of the Registrant

The information set forth under the caption "Election of Directors" of the 2016 Proxy Statement is incorporated herein by reference.

Executive Officers of the Registrant

The information set forth under the caption "Executive Officers of the Company" of the 2016 Proxy Statement is incorporated herein by reference.

Compliance with Section 16(a) of the Exchange Act

The information set forth under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" of the 2016 Proxy Statement is incorporated herein by reference.

Code of Ethics

The information set forth under the caption "Code of Ethics" of the 2016 Proxy Statement is incorporated herein by reference.

Audit Committee

The information set forth under the caption "Board Committees and Functions" of the 2016 Proxy Statement is incorporated herein by reference.

Item 11. Executive Compensation.

The information set forth under the caption "Compensation of Directors and Executive Officers" of the 2016 Proxy Statement is incorporated herein by reference.

Compensation Committee Interlocks and Insider Participation

The information set forth under the caption "Compensation Committee Interlocks and Insider Participation" of the 2016 Proxy Statement is incorporated herein by reference.

Compensation Committee Report

The information set forth under the caption "Compensation Committee Report" of the 2016 Proxy Statement is incorporated herein by reference.

Page 59

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The Company has no securities authorized for issuance under equity compensation plans with the exception of an employee stock purchase plan.  The employee stock purchase plan allows employees to purchase stock at a 5% discount up to a maximum of 10% of their gross compensation.  Under this plan, 80,711 authorized shares remain unissued as of December 31, 2015.

The information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" of the 2016 Proxy Statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information set forth under the captions "Director Independence" and "Related Party Transactions" of the 2016 Proxy Statement is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services.

The information set forth under the caption, "Principal Accountant's Fees and Services" of the 2016 Proxy Statement is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) Certain documents filed as part of the Form 10-K.

1. The financial statements set forth under Item 8 of this Form 10-K.

2. Financial Statement schedules.

Schedule	Schedule	Page
Number	Description	Number
II	Valuation and Qualifying Accounts	61
	for the years ended December 31, 2015, 2014, and 2013

The report of the Company's independent registered public accounting firm with respect to the financial statement schedule appears on page 30.

All other financial statements and schedules not listed have been omitted since the required information is included in the financial statements or the notes thereto, or is not applicable or required.

3. Exhibits required by Item 601 of Regulation S-K.

The exhibits are set forth in the Index to Exhibits shown on pages 63 through 66.

Page 60

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

FOR THE THREE YEARS ENDED DECEMBER 31, 2015

			Additions
Description	Balance at Beginning of Year		Charged to Cost and Expenses		Recoveries		Deductions		Balance at End of Year
FOR THE YEAR ENDED DECEMBER 31, 2015
Reserve for uncollectible accounts	$	325,000	$	292,248	$	40,681	$	342,929	$	315,000
FOR THE YEAR ENDED DECEMBER 31, 2014
Reserve for uncollectible accounts	$	320,000	$	322,499	$	44,071	$	361,570	$	325,000
FOR THE YEAR ENDED DECEMBER 31, 2013
Reserve for uncollectible accounts	$	305,000	$	290,886	$	36,369	$	312,255	$	320,000

The Deductions column above represents write-offs of accounts receivable during the applicable year.

Page 61

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE YORK WATER COMPANY
	(Registrant)
Dated: March 7, 2016	By: /s/Jeffrey R. Hines
	Jeffrey R. Hines
	President and CEO

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/Jeffrey R. Hines	By: /s/Kathleen M. Miller
Jeffrey R. Hines	Kathleen M. Miller
(Principal Executive Officer and Director)	(Principal Accounting Officer and Chief Financial Officer)
Dated: March 7, 2016	Dated: March 7, 2016
Directors:	Date:
By: /s/Michael W. Gang	March 7, 2016
Michael W. Gang
By: /s/Jeffrey R. Hines	March 7, 2016
Jeffrey R. Hines
By: /s/George W. Hodges	March 7, 2016
George W. Hodges
By: /s/George Hay Kain, III	March 7, 2016
George Hay Kain, III
By: /s/Jody L. Keller	March 7, 2016
Jody L. Keller
By: /s/Robert P. Newcomer	March 7, 2016
Robert P. Newcomer
By: /s/Steven R. Rasmussen	March 7, 2016
Steven R. Rasmussen
By: /s/Ernest J. Waters	March 7, 2016
Ernest J. Waters

Page 62

INDEX TO EXHIBITS

Exhibit Number	Exhibit Description	Page Number of Incorporation By Reference
3	Amended and Restated Articles of Incorporation	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 3.1 to Form 8-K dated May 4, 2010.
3.1	Amended and Restated By-Laws	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 3.1 to Form 8-K dated January 26, 2012.
4.1	Dividend Reinvestment and Direct Stock Purchase and Sale Plan	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission on Form S-3 dated October 1, 2013 (File No. 333-191496).
4.2	Indenture, dated as of October 1, 2010, by and between The York Water Company and Manufacturers and Traders Trust Company, as trustee, relative to the $15,000,000 5.0% Monthly Senior Notes	Incorporated herein by reference. Filed previously with the Securities and Exchange Commission as Exhibit 4.1 to the Company's October 8, 2010 Form 8-K.
4.3	First Supplemental Indenture, dated as of October 1, 2010, by and between The York Water Company and Manufacturers and Traders Trust Company, as trustee (which includes the form of Note)	Incorporated herein by reference. Filed previously with the Securities and Exchange Commission as Exhibit 4.2 to the Company's October 8, 2010 Form 8-K.
10.1	Articles of Agreement Between The York Water Company and Springettsbury Township relative to Extension of Water Mains dated April 17, 1985	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.1 to the Company's 1989 Form 10-K.
10.2	Note Agreement relative to the $6,000,000 10.17% Senior Notes, Series A and $5,000,000 9.60% Senior Notes, Series B dated January 2, 1989	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 4.5 to the Company's 1989 Form 10-K.

Page 63

Exhibit Number	Exhibit Description	Page Number of Incorporation By Reference
10.3	Note Agreement relative to the $6,500,000 10.05% Senior Notes, Series C dated August 15, 1990	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 4.6 to the Company's 1990 Form 10-K.
10.4	Note Agreement relative to the $7,500,000 8.43% Senior Notes, Series D dated December 15, 1992	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 4.7 to the Company's 1992 Form 10-K.
10.5	Promissory Note between The York Water Company and the Pennsylvania Infrastructure Investment Authority for $800,000 at 1.00% dated August 24, 1999	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 4.2 to the Company's 2000 Form 10-K.
10.6	Loan Agreement between The York Water Company and York County Industrial Development Authority, dated as of October 1, 2006 relative to the $10,500,000 4.75% Exempt Facilities Revenue Bonds	Incorporated herein by reference. Filed previously with the Securities and Exchange Commission as Exhibit 10.3 to the Company's September 15, 2009 Form 8-K.
10.7	Trust Indenture dated October 1, 2006 between the York County Industrial Development Authority and Manufacturers and Traders Trust Company, as trustee	Incorporated herein by reference. Filed previously with the Securities and Exchange Commission as Exhibit 10.4 to the Company's September 15, 2009 Form 8-K.
10.8	Variable Rate Loan Agreement between The York Water Company and Pennsylvania Economic Development Financing Authority, dated as of May 1, 2008 relative to the $12,000,000 Exempt Facilities Revenue Bonds	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.1 to the Company's May 12, 2008 Form 8-K.
10.9	Trust Indenture dated as of May 1, 2008 between Pennsylvania Economic Development Financing Authority and Manufacturers and Traders Trust Company, as trustee	Incorporated herein by reference. Filed previously with the Securities and Exchange Commission as Exhibit 10.5 to the Company's September 15, 2009 Form 8-K.
10.10	Reimbursement, Credit and Security Agreement, dated as of May 1, 2008 between The York Water Company and PNC Bank, National Association	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.3 to the Company's May 12, 2008 Form 8-K.

Page 64

Exhibit Number	Exhibit Description	Page Number of Incorporation By Reference
10.11	Loan Agreement between The York Water Company and Pennsylvania Economic Development Financing Authority, entered into April 25, 2014 and dated as of April 1, 2014 relative to the $14,880,000 4.50% Exempt Facilities Revenue Refunding Bonds	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.1 to the Company's April 28, 2014 Form 8-K.
10.12	Trust Indenture entered into April 25, 2014 and dated as of April 1, 2014 between Pennsylvania Economic Development Financing Authority and Manufacturers and Traders Trust Company, as trustee	Incorporated herein by reference. Filed previously with the Securities and Exchange Commission as Exhibit 10.2 to the Company's April 28, 2014 Form 8-K.
10.13	Loan Agreement between The York Water Company and York County Industrial Development Authority, entered into July 23, 2015 and dated as of July 1, 2015 relative to the $10,000,000 4.00% - 4.50% Exempt Facilities Revenue Bonds.	Incorporated herein by reference. Filed previously with the Securities and Exchange Commission as Exhibit 10.1 to the Company's July 24, 2015 Form 8-K.
10.14	Trust Indenture entered into July 23, 2015 and dated as of July 1, 2015 between York County Industrial Development Authority and Manufacturers and Traders Trust Company, as trustee	Incorporated herein by reference. Filed previously with the Securities and Exchange Commission as Exhibit 10.2 to the Company's July 24, 2015 Form 8-K.
10.15	Cash Incentive Plan	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.1 to the Company's January 28, 2005 Form 8-K.
10.16	Form of Amended and Restated Change in Control Agreement made as of November 5, 2008 between The York Water Company and each of the individuals listed on a schedule attached thereto, which plans are identical in all material respects except as indicated in the attached schedule	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.17 to the Company's March 8, 2011 Form 10-K.
10.17	Form of Amended and Restated Supplemental Retirement Plan made as of January 1, 2009 between The York Water Company and each of the individuals listed on a schedule attached thereto, which plans are identical in all material respects except as indicated in the attached schedule	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.18 to the Company's March 8, 2011 Form 10-K.

Page 65

Exhibit Number	Exhibit Description	Page Number of Incorporation By Reference
10.18	Form of Amended and Restated Deferred Compensation Plan made as of July 1, 2015 between The York Water Company and each of the individuals listed on a schedule attached thereto, which plans are identical in all material respects except as indicated in the attached schedule	Filed herewith.
10.19	Form of Amended and Restated Deferred Compensation Plan made as of January 1, 2009 between The York Water Company and each of the individuals listed on a schedule attached thereto, which plans are identical in all material respects except as indicated in the attached schedule	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.19 to the Company's March 8, 2011 Form 10-K.
14	Company Code of Conduct	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 14 to the Company's August 6, 2014 Form 10-Q.
23	Consent of Baker Tilly Virchow Krause, LLP, Independent Registered Public Accounting Firm	Filed herewith.
31.1	Certification pursuant to Rule 13a-15(f) and 15d-15(f)	Filed herewith.
31.2	Certification pursuant to Rule 13a-15(f) and 15d-15(f)	Filed herewith.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.
101.INS	XBRL Instance Document	Filed herewith.
101.SCH	XBRL Taxonomy Extension Schema	Filed herewith.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase	Filed herewith.
101.DEF	XBRL Taxonomy Extension Definition Linkbase	Filed herewith.
101.LAB	XBRL Taxonomy Extension Label Linkbase	Filed herewith.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase	Filed herewith.

Page 66

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statements on Form S 3 (No. 333-191496) and Form S-8 (No. 333-191497) of The York Water Company of our reports dated March 8, 2016, relating to the financial statements and financial statement schedule and the effectiveness of The York Water Company's internal control over financial reporting which appear in this Form 10-K.

/s/Baker Tilly Virchow Krause, LLP

Baker Tilly Virchow Krause, LLP

York, Pennsylvania

March 8, 2016

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Jeffrey R. Hines, certify that:
1.	I have reviewed this report on Form 10-K of The York Water Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,  to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  March 7, 2016	/s/Jeffrey R. Hines
	Jeffrey R. Hines
	President and CEO

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Kathleen M. Miller, certify that:
1.	I have reviewed this report on Form 10-K of The York Water Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,  to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  March 7, 2016	/s/Kathleen M. Miller
	Kathleen M. Miller
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of The York Water Company on Form 10-K for the period ending December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeffrey R. Hines, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	THE YORK WATER COMPANY
	/s/Jeffrey R. Hines
	Jeffrey R. Hines
	Chief Executive Officer
Date: March 7, 2016

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of The York Water Company on Form 10-K for the period ending December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kathleen M. Miller, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	THE YORK WATER COMPANY
	/s/Kathleen M. Miller
	Kathleen M. Miller
	Chief Financial Officer
Date: March 7, 2016

EX-10.18

EXHIBIT 10.18

The York Water Company

Amended and Restated

DEFERRED COMPENSATION PLAN

(Effective July 1, 2015)

RECITALS

THIS AMENDED AND RESTATED DEFERRED COMPENSATION PLAN (the "Plan") is hereby adopted as of the 1st day of July, 2015, by The York Water Company, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania (the "Plan Sponsor").

WHEREAS, the Plan Sponsor has previously adopted and established a non-tax qualified plan of deferred compensation to provide additional retirement benefits for a select group of management and highly compensated employees; and

WHEREAS, effective as of July 1, 2015, the Plan Sponsor has amended and restated the Plan in its entirety and intends that the Plan shall at all times be administered and interpreted in such a manner as to constitute an unfunded nonqualified deferred compensation plan for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). This Plan is not intended to qualify for favorable tax treatment pursuant to Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), or any successor section or statute. This Plan is intended to comply with the requirements of Section 409A of the Code and the Treasury Regulations (as defined below) or any other authoritative guidance issued under that section.

NOW, THEREFORE, the Plan Sponsor hereby adopts the following Amended and Restated Deferred Compensation Plan.

ARTICLE 1.Definitions

For the purpose of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

1.1"Account or Accounts" shall mean a book account reflecting amounts credited to a Participant's Separation From Service Account, Scheduled Withdrawal Account(s) and Plan Sponsor Contribution Account, as adjusted for deemed investment performance and all distributions or withdrawals made by the Participant or his or her Beneficiary. To the extent that it is considered necessary or appropriate, the Plan Administrator shall maintain separate sub-accounts for each source of contribution under the Plan or shall otherwise provide a means for determining that portion of an Account attributable to each contribution source.

1.2"Affiliate" shall mean any business entity other than the Plan Sponsor that is a member of a controlled group of corporations, within the meaning of Section 414(b) of the Code, of which the Plan Sponsor is a member; all other trade or business (whether or not incorporated) under common control, within the meaning of Section 414(c) of the Code, with the Plan Sponsor; any service organization other than the Plan Sponsor that is a member of an Affiliated service group, within the meaning of Section 414(m) of the Code, of which the Plan Sponsor is a member; and any other organization that is required to be aggregated with the Plan Sponsor under Section 414(o) of the Code and whose Eligible Employees are authorized to participate in this Plan by the Plan Administrator.

1.3"Annual Deferral Amount" shall mean that portion of a Participant's Base Salary that a Participant elects to defer under the Plan.

1.4"Base Salary" shall mean the annual cash compensation relating to services performed during any Plan Year, (excluding bonuses, commissions, overtime, fringe benefits, incentive payments, SERP compensation, non-monetary awards, relocation expenses, retainers, directors fees and other fees, severance allowances, pay in lieu of vacations, insurance premiums paid by the Plan Sponsor, insurance benefits paid to the Participant or his or her Beneficiary, stock options and grants, and car allowances) paid to a Participant for services rendered to the Plan Sponsor or an Affiliate. Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or non-qualified plans of the Plan Sponsor or an Affiliate and shall be calculated to include amounts not otherwise included in the Participant's gross income under Sections 125, 402(e)(3), 402(h), or 403(b) of the Code pursuant to plans established by the Plan Sponsor; provided, however, that all such amounts will be included in compensation only to the extent that, had there been no such plan, the amounts would have been payable in cash to the Participant.

1.5"Beneficiary" shall mean one or more persons, trusts, estates or other entities that are entitled to receive benefits under this Plan upon the death of the Participant.

1.6"Board" shall mean the Board of Directors of Plan Sponsor.

1.7"Cause" shall mean any of the following acts or circumstances:

(a) Willful destruction by the Participant of property of the Plan Sponsor or an Affiliate having a material value to the Plan Sponsor or such Affiliate;

(b) fraud, embezzlement, theft, or comparable dishonest activity committed by the Participant (excluding acts involving a de minimis dollar value and not related to the Plan Sponsor or an Affiliate);

(c) the Participant's conviction of or entering a plea of guilty or nolo contendere to any crime constituting a felony or any misdemeanor involving fraud, dishonesty or moral turpitude (excluding acts involving a de minimis dollar value and not related to the Plan Sponsor or an Affiliate);

(d) the Participant's breach, neglect, refusal, or failure to materially discharge the Participant's duties (other than due to physical or mental illness) commensurate with the Participant's title and function or the Participant's failure to comply with the lawful directions of the Board or a senior managing officer of the Plan Sponsor, or of the Board or a senior managing officer of an Affiliate that employs the Participant, in any such case that is not cured within fifteen (15) days after the Participant has received written notice thereof from such Board or senior managing officer;

(e) any willful misconduct by the Participant which may cause substantial economic or reputation injury to the Plan Sponsor, including, but not limited to, sexual harassment, or;

(f) a willful and knowing material misrepresentation to the Board or a senior managing officer of the Plan Sponsor or to the Board or a senior managing officer of an Affiliate that employs the Participant.

1.8"Claimant" shall mean a person who believes that he or she is being denied a benefit to which he or she is entitled hereunder.

1.9"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the Treasury Regulations promulgated thereunder.

1.10"Disability" shall mean a condition of the Participant whereby he or she either: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Plan Sponsor.  Items (i) and (ii) of this Section 1.10 are permitted provided they are in compliance with the requirements of Treasury Regulations Section 1.409A-3(g)(4).  A Participant will also be deemed disabled if determined to be totally disabled by the Social Security Administration or in accordance with a disability insurance program, provided that the definition of Disability applied under such disability insurance program complies with the requirements of Treasury Regulations Section 1.409A-3(g)(4).

1.11"Effective Date" of the Plan as amended and restated herein is July 1, 2015.

1.12"Election Form" shall mean the form or forms established from time to time by the Plan Administrator on which the Participant irrevocably elects, prior to the first Plan Year in which it is earned (except as provided under the special rule for newly Eligible Employees set forth in Section 2.3 below), his or her Annual Deferral Amount for the following Plan Year and each of the seven to ten Plan Years thereafter, and the Participant designates his or her Beneficiary, as required on that form and under the terms of the Plan.

1.13"Eligible Employee" shall mean for any Plan Year (or applicable portion of a Plan Year), a person who is determined by the Plan Sponsor, or its designee, to be a member of a select group of management or highly compensated employees of the Plan Sponsor or an Affiliate, and who is designated by the Plan Sponsor, or its designee, to be an Eligible Employee under the Plan. If the Plan Sponsor determines that an individual first becomes an Eligible Employee during a Plan Year, the Plan Sponsor shall notify the individual of its determination and of the date during the Plan Year on which the individual shall first become an Eligible Employee.

1.14"Enhanced Benefit" shall mean with respect to the Participants listed on Appendix A attached hereto, the Participant's Vested Account balance, multiplied by the Enhancement Factor.

1.15"Enhancement Factor" shall mean the factor listed on Appendix A by which the Vested Account balances for the Participants listed on Appendix A shall be multiplied.

1.16"Entry Date" shall mean with respect to an Eligible Employee, the first day of the pay period following the date on which the Eligible Employee becomes a Participant.

1.17"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

1.18"FICA Amount" shall mean the Participant's share of the tax imposed on a Participant's Base Salary and Plan Sponsor Contributions, if any, under the Federal Insurance Contributions Act.

1.19"Participant" shall mean (A) any Eligible Employee (i) who is selected to participate in this Plan, (ii) who elects to participate in this Plan by signing a Participation Agreement, (iii) who completes and signs certain Election Form(s) required by the Plan Administrator, and (iv) whose signed Election Form(s) are accepted by the Plan Administrator or (B) a former Eligible Employee who continues to be entitled to a benefit under this Plan. A spouse or former spouse of a Participant shall not be treated as a Participant in this Plan or have an Account balance under this Plan, even if he or she has an interest in the Participant's benefits under this Plan as a result of applicable law or property settlements resulting from legal separation or marital dissolution or divorce.

1.20"Participation Agreement" shall mean the document executed by the Eligible Employee and Plan Administrator whereby the Eligible Employee agrees to participate in the Plan.

1.21"Permissible Payment Event" shall mean one or more of the following events upon which payment may be made to a Participant or his or her Beneficiary under the terms of the Plan: (i) the Participant's Separation from Service, (ii) the Participant's death, (iii) the Participant's Disability, (iv) upon the occurrence of an Unforeseeable Emergency, or (v) a time or pursuant to a fixed schedule and/or retirement date specified under the Plan, within the meaning of Treasury Regulations Section 1.409A-3(a).

1.22"Plan" shall mean The York Water Company Amended and Restated Deferred Compensation Plan, as set forth herein and amended from time to time.

1.23"Plan Administrator" shall be the Board or its designee. A Participant in the Plan should not serve as a singular Plan Administrator. If a Participant is part of a group of Participants designated as a committee or Plan Administrator, then the Participant may not participate in any activity or decision relating solely to his or her individual benefits under the Plan; matters solely affecting the applicable Participant will be resolved by the remaining Plan Administrator members or by the Board.

1.24"Plan Sponsor" shall mean The York Water Company, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania.

1.25"Plan Sponsor Contribution" shall mean the amount contributed to a Participant's Plan Sponsor Contribution Account pursuant to Sections 3.1 and 3.2.

1.26"Plan Sponsor Contribution Account" shall mean: (i) the sum of the Participant's Plan Sponsor Contribution amounts, plus (ii) amounts credited (net of amounts debited, which may result in an aggregate negative number) pursuant to Section 3.3.

1.27"Plan Year" shall mean the twelve (12) month period beginning January 1 of each calendar year and continuing through December 31 of such calendar year.

1.28"Scheduled Withdrawal Account" shall mean: (i) the sum of the Participant's Annual Deferral Amount(s) plus (ii) the sum of the Participant's Plan Sponsor Contribution Amount(s) plus (iii) amounts credited (net of amounts debited, which may result in an aggregate negative number pursuant to Section 3.3)[,] less (iv) all distributions made to, or withdrawals by, the Participant or his or her Beneficiary, and tax withholding amounts which may have been deducted from the Scheduled Withdrawal Account(s).

1.29"Section 409A" shall mean Section 409A of the Code and the Treasury Regulations or other authoritative guidance issued under that section.

1.30"Separation from Service" shall mean a Participant's termination of active employment, whether voluntary or involuntary, other than by death, Disability, or leave of absence with the Plan Sponsor or Affiliate(s), within the meaning of Section 409A(a)(2)(A)(i) of the Code, and the Treasury Regulations thereto.

1.31"Separation From Service Account" shall mean (i) the sum of the Participant Annual Deferral Amount(s) plus (ii) amounts credited (net of amounts debited, which may result in an aggregate negative number) pursuant to Section 3.3 less (iii)) all distributions made to or withdrawals by the Participant or his or her Beneficiary that relate to the Participant's Separation From Service Account, and tax withholdings amounts deducted (if any) from the Participants' Separation From Service Account.

1.32"Specified Employee" shall mean a key employee (as defined by Section 416(i) of the Code without regard to paragraph (5) thereof), and as further defined in Treasury Regulations Section 1.409A-(1)(i),) of the Plan Sponsor the stock of which is publicly traded on an established securities market or otherwise within the meaning of Section 409A(2)(B)(i). Notwithstanding other provisions of this Plan to the contrary, distributions by the Plan Sponsor to Specified Employees (if any) may not be made before the date which is six (6) months after the date of Separation from Service (or, if earlier, the date of death of the Specified Employee) within the meaning of Treasury Regulations Section 1.409A-3(g)(2). If payments to a Specified Employee are to be made in installments each installment payment to which a Specified Employee is entitled upon a Separation from Service will be delayed by six (6) months. A Participant meeting the definition of Specified Employee on December 31 or during a 12 month period ending December 31 will be treated as a Specified Employee for the 12 month period commencing the following April 1.

1.33 "Treasury Regulations" shall mean regulations promulgated by the Internal Revenue Service for the U.S. Department of the Treasury, either proposed, or permanent, and as may be amended from time to time.

1.34"Trust" shall mean one or more grantor trusts, of which the Plan Sponsor is the grantor, within the meaning of subpart E, part I, subchapter J, subtitle A of the Code, to pay benefits under this Plan, that may be established in accordance with the terms of the Plan.

1.35"Unforeseeable Emergency" shall mean a severe financial hardship of the Participant or Beneficiary resulting from an illness or accident of the Participant or Beneficiary, the Participant or Beneficiary's spouse, or the Participant or Beneficiary's dependent(s) (as defined in Section 152(a)) of the Code or loss of the Participant or Beneficiary's property due to casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or Beneficiary within the meaning of Section 409A.

1.36"Vested Account" shall mean a Participant's Separation from Service Account balance plus Plan Sponsor Contribution Account balance plus other amounts vested in accordance with Section 4.1 below.

ARTICLE 2.Selection, Enrollment, Eligibility

2.1Selection by Plan Sponsor. Participation in this Plan shall be limited to a select group of management or highly compensated employees of the Plan Sponsor, as determined by the Plan Sponsor in its sole and absolute discretion. The initial group of Eligible Employees shall become Participants on the Effective Date of the Plan. Any individual selected by the Plan Administrator as an Eligible Employee after the Effective Date, shall become a Participant on the first Entry Date occurring on or after the date on which he or she becomes an Eligible Employee, provided that the Eligible Employee meets the enrollment requirements set forth in Section 2.3 below.

2.2Re-Employment.  If a Participant who incurs a Separation from Service with the Plan Sponsor or an Affiliate is subsequently re-employed, he or she may, at the sole and absolute discretion of the Plan Administrator, become a Participant in accordance with the provisions of above Section 2.1.

2.3Enrollment Requirements. As a condition to participation in this Plan, each selected Eligible Employee shall complete, execute, and return to the Plan Administrator a Participation Agreement and Election Form within the time specified by the Plan Administrator, but in no event later than thirty (30) days following the date that an Eligible Employee is first selected by the Plan Sponsor to participate in the Plan in accordance with Section 2.1 above; provided, however, that any Base Salary deferral election shall be effective only with regard to Base Salary earned following submission of the Participation Agreement and Election Form to the Plan Administrator.  In addition, the Plan Administrator shall establish such other enrollment requirements as it determines necessary or advisable. All elections to defer Base Salary with respect to a Plan Year shall be irrevocable, except as permitted under Section 5.8 below (Unforeseeable Emergency).

2.4Plan Aggregation Rules.  This Plan shall constitute an "account balance plan" as defined in Treasury Regulations Section 31.3121(v)(2)-1(c)(1)(ii)(A).  For purposes of Section 409A, all amounts deferred by or on behalf of a Participant under this Plan shall be aggregated with deferred amounts under other "account balance plans" currently maintained or adopted in the future by the Plan Sponsor, and all amounts shall be treated as deferred under the rules governing a single plan.

2.5Termination of Participation. If the Plan Administrator determines that a Participant who has not experienced a Separation from Service no longer qualifies as a member of a select group of management or highly compensated employees or that such a Participant's participation in the Plan could jeopardize the status of this Plan as "unfunded" and "maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees," the Plan Administrator shall have the right to terminate any deferral election the Participant has made for any Plan Year following the Plan Year in which the Participant is determined by the Plan Administrator to no longer qualify as a member of a select group of management or highly compensated employees but only to the extent such termination complies with the requirements of Section 409A, and/or to prevent the Participant from making future deferral elections and receiving Plan Sponsor Contribution Amounts under the Plan.

ARTICLE 3.Contributions and Credits

3.1Plan Sponsor Discretionary Contributions. The Plan Sponsor may make discretionary contributions to the Participant's Plan Sponsor Contribution Account as it may determine from time to time and may direct that such contributions be allocated to those Participants that it may select. The amount so credited to a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a Plan Year may be zero. No Participant shall have a right to compel the Plan Sponsor to make a Plan Sponsor discretionary contribution under this Article and no Participant shall have the right to share in any such contribution for any Plan Year unless selected by the Plan Sponsor, in its sole and absolute discretion.

3.2Plan Sponsor Non-Discretionary Contributions The Plan Sponsor shall make a non-discretionary contribution/match equal to 2.5% of the Participant's base salary, Section 1.4, as of the Participant's date of initial eligibility for each year the Participant contributes to the Plan, not to exceed eleven (11) years.

3.3Account Earnings.  From time to time, as appropriate, the Plan Sponsor will also credit the Participant's Plan Sponsor Contribution Account and the Participant's Separation from Service Account with interest on the existing credit balance at a rate determined at the sole discretion of the Plan Sponsor, said rate to EQUAL THE DECEMBER 31 RATE OF MOODY'S AAA CORPORATE BOND YIELD FORECAST for the first Plan Year and for all subsequent periods unless changed by the Plan Sponsor.  No interest shall be credited to any Participant's account(s) after a Separation from Service.

ARTICLE 4.Vesting and Taxes

4.1Vesting of Benefits.

(a) A Participant shall be 100% vested in his or her Separation from Service Account, Section 1.31, at all times.

(b) A Participant shall be 100% vested in Plan Sponsor Contribution Account, Section 1.26, after ten (10) complete years of plan participation.

(c) A Participant shall be 100% vested in the Permissible Payment Event Calculation, Section 5.15(b), after fifteen (15) complete years of plan participation.

(d) Notwithstanding Section 4.1, (b), (c), a Participant shall be 100% vested in all accounts (including gross up as set forth in Section 5.15 below) when the Participant attains the age of 60.

(e) A Participant shall be 100% vested in the Enhanced Benefit, Section 1.14 and the Enhancement Factor, Section 1.15 when the Participant attains the age of 60.

(f) In the event the Participant's employment is terminated for Cause, no benefits of any kind will be due or payable under the terms of this Plan from amounts credited to a Participant's Plan Sponsor Contribution Account nor shall the Permissible Payment Event Calculation be engaged to determine any Participant benefit and all rights of the Participant, his or her designated Beneficiary, executors, or administrators, or any other person, to receive payments thereof shall be forfeited.  This Section 4.1(f) shall apply to a Participant's Plan Sponsor Contribution Account and Permissible Payment Event Calculation whether or not such amounts or calculations are vested pursuant to Section 4.1 (b), (c), (d), (e).

4.2FICA, Withholding and Other Taxes.

(a) Pre-Distribution Tax Withholdings. The Plan Sponsor, or trustee of the Trust, shall withhold the FICA amount and other employment taxes from the Participant's Base Salary in a manner determined in the sole discretion of the Plan Sponsor as a Participant becomes vested in his or her accounts and calculation pursuant to Section 4.1 (a), (b), (c), (d) and (e), as applicable.

(b) Distributions. The Plan Sponsor, or trustee of the Trust, shall withhold from any payments made to a Participant or Beneficiary under this Plan all federal, state and local income, employment and other taxes required to be withheld by the Plan Sponsor that complies with applicable tax withholding requirements.

ARTICLE 5.Permissible Payment Events, Changes in Time and Form of Payments, Method of Payments

5.1Payment Following Death While Actively Employed.  In the event of the Participant's death while actively employed, and provided that the Plan Sponsor is first provided a valid death certificate, the Participant's Beneficiary shall be paid the higher of (a) $150,000 or (b) the Participant's Vested Account balance (including gross up as set forth in Section 5.15 and enhancement as set forth in Section 5.16 below) with payment being made in a single lump sum within ninety (90) days following the date of death of the Participant (without regard to whether the Participant was a Specified Employee) to the Participant's Beneficiary.

5.2Payment Following a Separation From Service with Less Than Ten Complete Years in the Plan. 

If a Participant Separates from Service prior to attaining ten (10) complete years in the Plan, the Participant's Separation from Service Account balance in accordance with Section 4.1(a), (b) shall be paid in a lump sum within ninety (90) days following the Participant's Separation from Service.  Notwithstanding the above, if the Participant is a Specified Employee, Section 1.32, such payment shall instead be made or commence six (6) months after the Participant's Separation from Service.

5.3Payment Following a Separation From Service with Ten Complete Years in the Plan, but Less Than Fifteen Complete Years in the Plan and Less Than Sixty Years of Age.  A Participant shall be paid his or her Scheduled Withdrawal Account balance in accordance with Section 4.1 with payments being made or commencing within ninety (90) days following the Participant's Separation from Service and the attainment of age sixty (60). Notwithstanding the above, if the Participant is a Specified Employee, Section 1.32, such payment shall instead be made or commence six (6) months after the Participant's Separation from Service.

5.4Payment Following a Separation From Service with Fifteen or More Complete Years in the Plan and Less Than Sixty Years of Age.  A Participant shall be paid his or her Scheduled Withdrawal Account balance in accordance with Section 4.1 with payments being made or commencing within ninety (90) days following the Participant's Separation from Service and the attainment of age sixty (60).  Notwithstanding the above, if the Participant is a Specified Employee, Section 1.32, such payment shall instead be made or commence six (6) months after the Participant's Separation from Service.

5.5Payment Following a Separation From Service at Age Sixty or More.  A Participant shall be paid his or her Vested Account balance in accordance with Section 4.1 with payments being made or commencing within ninety (90) days following the Participant's Separation from Service at age sixty (60) or more.  Notwithstanding the above, if the Participant is a Specified Employee, Section 1.32, such payment shall instead be made or commence six (6) months after the Participant's Separation from Service.

5.6Payment Following Disability. In the event of a Participant's Disability, the Participant shall be paid his or her Vested Account balance with payment or payments being made or commencing within ninety (90) days following the determination of a Participant's Disability.  Amounts shall be distributed according to the form of payment set forth in Section 5.9(b) below.

5.7Payment Following Death After Receiving Payments. In the event of the Participant's death after he or she begins receiving payments pursuant to the terms of the Plan, and provided that the Plan Sponsor is first provided a valid death certificate, the Participant's designated Beneficiary shall be paid the Participant's remaining Vested Account balance in a single lump sum within ninety (90) days following the date of death of the Participant (without regard to whether the Participant was treated as a Specified Employee).

5.8Payment in the Event of an Unforeseeable Emergency. If the Participant experiences an Unforeseeable Emergency, the Participant may petition the Plan Administrator for payment of an amount that shall not exceed the lesser of: (i) the Participant's vested Account(s), or (ii) the amount reasonably needed to satisfy the Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the payment. A Participant may not receive such a payment to the extent that the Unforeseeable Emergency is or may be relieved: (i) through reimbursement or compensation by insurance or otherwise, or (ii) by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship. If the Plan Administrator approves a Participant's petition for a payment then the Participant shall receive said payment, in lump sum,  as soon as administratively feasible after such approval.

5.9Method of Payments.

(a) Cash. All distributions under the Plan made under the Plan shall be made in cash.

(b) Form of Payment. Upon the occurrence of a Permissible Payment Event, the Account(s) shall be calculated as of the date of said event. Installment payments made after the first payment shall be paid on or about the applicable modal anniversary of the first payment date until all required installments have been paid.  Except as otherwise stated in Sections 5.1 and 5.2 above, which provide for lump sum payments, the amount of each payment shall be determined in accordance with Section 5.15 below. Lump sum payment may not be elected by the Participant.

(c) Lump Sum Payment of Minimum Account Balances. Notwithstanding anything else contained herein to the contrary, if the Vested Account balance for a Participant at the due date of the first installment is ten thousand dollars ($10,000.00) or less, payment of the Account(s) shall be made instead in a lump sum on the due date of the first installment, and no installment payments shall be available.

5.10No Accelerations. Notwithstanding anything in this Plan to the contrary, no change submitted on a Participant Election Form shall be accepted by the Plan Sponsor.  The Plan Sponsor may, however, accelerate certain distributions under the Plan to the extent permitted under Section 409A as follows:

(a) Conflicts of Interest. The Plan will permit such acceleration of the time or schedule of payment under the Plan as may be necessary to comply with a certificate of divesture.

(b) De Minimis and Specified Amounts. The Plan will permit the acceleration of the time or schedule of payment to a Participant, provided that (i) the payment accompanies the termination in the entirety of the Participant's interest in the Plan; (ii) the payment is made on or before the later of: (A) December 31 of the Plan Year in which occurs the Participant's Separation from Service from the Plan Sponsor, or (B) the date is 2 ½ months after the Participant's Separation from Service from the Plan Sponsor; and (iii) the payment is not greater than $10,000.

(c) Payment of Employment Taxes. The Plan will permit the acceleration of the time or schedule of a payment to pay the FICA Amount. Additionally, the Plan will permit the acceleration of the time or schedule of a payment to pay the income tax on wages imposed as a result of the payment of the FICA amount, and to pay the additional income tax on wages attributable to the pyramiding wages and taxes. However, the total payment under this acceleration provision will not exceed the aggregate of the FICA Amount, and the income tax withholding related to such FICA Amount in accordance with the requirement of Treasury Regulations Section 1.409A-3(j)(4)(vi).

(d) Payment upon Income Inclusion under Section 409A.  The Plan will permit the acceleration of the time or schedule of a payment to a Participant at any time the Plan fails to meet the requirements of Section 409A.  Such Payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Section 409A.

5.11Unsecured General Creditor Status of Participant.

(a) Payment to the Participant or any Beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be part of the general, unrestricted assets of the Plan Sponsor and no person shall have any interest in any such asset by virtue of any provision of this Plan. The Plan Sponsor's obligation hereunder shall be an unfunded and unsecured promise to pay money in the future.  To the extent that any person acquires a right to receive payments from the Plan Sponsor under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Plan Sponsor and no such person shall have or acquire any legal or equitable right, interest or claim in or to any property or assets of the Plan Sponsor.

(b) In the event that the Plan Sponsor purchases an insurance policy or policies insuring the life of a Participant or employee, to allow the Plan Sponsor to recover or meet the cost of providing benefits, in whole or in part, hereunder, no Participant or Beneficiary shall have any rights whatsoever in said policy or the proceeds there from. The Plan Sponsor, or Trustee, shall be the primary owner and beneficiary of any such insurance policy or property and shall possess and may exercise all incidents of ownership therein.

(c) In the event that the Plan Sponsor purchases an insurance policy or policies on the life of a Participant as provided for above, then all of such policies shall be subject to the claims of the creditors of the Plan Sponsor.

(d) If the Plan Sponsor chooses to obtain insurance on the life of a Participant in connection with its obligations under this Plan, the Participant hereby agrees to take such physical examinations and to truthfully and completely supply such information as may be required by the Plan Sponsor or the insurance company designated by the Plan Sponsor.

5.12Facility of Payment.  If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Plan Administrator may make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his or her residence, or (ii) to the conservator or administrator or, if none, to the person having custody of an incompetent payee. Any such distribution shall fully discharge the Plan Sponsor and the Plan Administrator from further liability on account thereof.

5.13Excise Tax Limitation:  In the event that any payment or benefit (within the meaning of Section 280G(b)(2) of the Code) to the Participant or for the Participant's benefit paid or payable or distributed or distributable (including, but not limited to, the acceleration of the time for the vesting or payment of such benefit or payment) pursuant to the terms of this Plan or otherwise in connection with, or arising out of, the Participant's employment with the Plan Sponsor or any of its Affiliates or a Change of Control within the meaning of Section 280G of the Code (a "Payment" or "Payments"), would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then the Payments shall be reduced (but not below zero) but only to the extent necessary that no portion thereof shall be subject to the Excise Tax (the "Section 4999 Limit").  The Payments shall be reduced on a nondiscretionary basis in such a way as to minimize the reduction in the economic value deliverable to the Participant.  Where more than one payment has the same value for this purpose and they are payable at different times they will be reduced on a pro rata basis.

5.14Delay in Payment by Plan Sponsor.  In the case of payments by the Plan Sponsor to a Participant or Participant's Beneficiary, the deduction for which would be limited or eliminated by the application of Section 162(m) of the Code, payments that would otherwise violate securities laws, or payments that would violate loan covenants or other contractual terms to which the Participant is a party, and where such a violation would result in material harm to the Plan Sponsor, said payments may be delayed.  In the case of deduction limitations imposed by Section 162(m) of the Code, payment will be deferred until the earlier of (i) a date in the first year in which the Plan Sponsor reasonably anticipates that a payment of such amount would not result in a limitation under 162(m) or (ii) the year in which the Participant Separates from Service.  Payments delayed for other permissible reasons must be made in the first calendar year in which the Plan Sponsor reasonably anticipates that the payment would not violate the loan contractual terms, the violation would not result in material harm to the Plan Sponsor, or the payment would not result in a violation of Federal securities law or other applicable laws.

5.15Permissible Payment Event Calculation.

(a)The Plan Sponsor agrees that in determining the benefits payable under Section 5.3, above, that the amount of each monthly payment actually made to the Participant or his or her Beneficiary will be determined by dividing his or her Scheduled Withdrawal Account balance prior to the first payment by 120.

Example Without Tax Savings:

Scheduled Withdrawal Account Value at age 60 =$100,000.00. (Participant Separatedfrom Service Prior to vestingof Tax Saving Multiplier)

Step 1:Actual Benefit to be paid each year: $100,000/10 years = $10,000

Step 2:Actual Benefit to be paid each month: $100,000/120 = $833.34

(b)The Plan Sponsor agrees that in determining the benefits payable under Sections 5.4 above, that the amount of each monthly payment actually made to the Participant or his or her Beneficiary will be determined by dividing his or her Scheduled Withdrawal Account balance prior to the first payment by 120 and then increasing the amount by the amount of federal and state income tax saved by the Plan Sponsor (if any) when making each payment.  The savings will be calculated based on the marginal federal and state income tax bracket for the Plan Sponsor at the time of separation from service.

Example With Tax Savings without Enhancement Factor:

Scheduled Withdrawal Account Value at age 60 = $100,000.00.  Corporate Marginal Tax Rate is 0.4059. Participant Separated from Service Prior to age 60.

Step 1: Determine Tax Savings Multiplier (1 minus Tax Bracket %, or 1-.4059 = .5941)

Step 2: Calculate Actual Benefit To Be Paid (Divide Account Value by the Tax Savings Multiplier, or $100,000 divided by .5941 = $168,321.84)

Step 3: Actual Benefit to be paid each year: $168,321.84/10 years =$16,832.18

Step 4: Actual Benefit to be paid each month: $168,321.84/120 = $1,402.68

(c)The Plan Sponsor agrees that in determining the benefits payable under Sections 5.1, 5.5 and 5.6 above, that the amount of each monthly payment actually made to the Participant or his or her Beneficiary will be determined by dividing his or her Scheduled Withdrawal Account balance  prior to the first payment by 120 and then increasing the amount by the amount of federal and state income tax saved by the Plan Sponsor (if any) when making each payment, then increasing the grossed up amount to the Enhanced Benefit described in Section 5.16 below.  The tax savings will be calculated based on the marginal federal and state income tax bracket for the Plan Sponsor.

Example With Tax Savings and Enhancement Factor:

Scheduled Withdrawal Account Value at age 65 = $100,000.00.  Corporate Marginal Tax Rate is 0.4059. Monthly Enhancement Factor .0115.

Step 1: Determine Tax Savings Multiplier (1 minus Tax Bracket %, or 1-.4059 = .5941)

Step 2: Calculate Grossed Up Benefit (Divide Account Value by the Tax Savings Multiplier, or $100,000 divided by .5941 = $168,321.84)

Step 3: Calculate Enhanced Benefit to be paid each year (Grossed Up Benefit multiplied by Annual Enhancement Factor or $168,321.84 multiplied by .138 (.0115 times 12) = $23,228.41

Step 4: Calculate Enhanced Benefit to be paid each month : $23,228.41 divided by 12 months = $1,935.70

5.16Enhanced Benefit.  Notwithstanding anything to the contrary in this Section 5, Participants listed on Appendix A shall be entitled to the Enhanced Benefit, which shall be payable at the time and in the forms indicated in Sections 5.1, 5.5 and 5.6, and Section 5.15, as applicable.

ARTICLE 6.Beneficiary Designation

6.1Designation of Beneficiaries.

(a) Each Participant may designate any person or persons (who may be named contingently or successively) to receive any benefits payable under the Plan upon the Participant's death, and the designation may be changed from time to time by the Participant by filing a new designation. Each designation will revoke all prior designations by the same Participant, shall be in the form prescribed by the Plan Administrator, and shall be effective only when filed in writing with the Plan Administrator during the Participant's lifetime.

(b) In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Participant, the Plan Sponsor shall pay the benefit payment to the Participant's spouse, if then living, and if the spouse is not then living to the Participant's then living descendants, if any, per stirpes, and if there are no living descendants, to the Participant's estate. In determining the existence or identity of anyone entitled to a benefit payment, the Plan Sponsor may rely conclusively upon information supplied by the Participant's personal representative, executor or administrator.

(c) If a question arises as to the existence or identity of anyone entitled to receive a death benefit payment under the Plan, or if a dispute arises with respect to any death benefit payment under the Plan, the Plan Sponsor may distribute the payment to the Participant's estate without liability for any tax or other consequences, or may take any other action which the Plan Sponsor deems to be appropriate.

6.2Information to be Furnished by Participants and Beneficiaries; Inability to Locate Participants or Beneficiaries. Any communication, statement or notice addressed to a Participant or to a Beneficiary at his or her last post office address as shown on the Plan Sponsor's records shall be binding on the Participant or Beneficiary for all purposes of this Plan. The Plan Sponsor shall not be obligated to search for any Participant or Beneficiary beyond the sending of a registered letter to the last known address.

ARTICLE 7.Termination, Amendment or Modification

7.1Plan Termination.  The Plan Sponsor reserves the right to terminate the Plan in accordance with one of the following, subject to the restrictions imposed by Section 409A:

(a) Corporate Dissolution or Bankruptcy. Distributions will be made if the Plan is terminated within twelve (12) months of a corporate dissolution taxed under Section 331 of the Code, or with the approval of a bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A), provided that the amounts deferred under the Plan are included in the Participant's gross income in the latest of:

(i) The calendar year in which the Plan termination occurs;

(ii) The calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or

(iii) The first calendar year in which the payment is administratively practicable.

(b) Discretionary Termination. The Plan Sponsor may also terminate the Plan and make distributions provided that:

(i) All plans sponsored by the Plan Sponsor that would be aggregated with any terminated arrangements under Treasury Regulations Section 1.409A-1(c) are terminated;

(ii) No payments other than payments that would be payable under the terms of the Plan if the termination had not occurred are made within twelve (12) months of the Plan termination;

(iii) All payments are made within twenty-four (24) months of the Plan termination;

(iv) Termination of the Plan does not occur proximate to a downturn in the financial health of the Plan Sponsor; and

(v) The Plan Sponsor does not adopt a new plan that would be aggregated with any terminated plan if the same Participant participated in both arrangements, at any time within three (3) years following the date of termination of the Plan.

The Plan Sponsor also reserves the right to suspend the operation of the Plan for a fixed or indeterminate period of time.

(c) [Change in Control.  The Plan Sponsor may also terminate the Plan and make distributions provided that:

(i) All plans sponsored by the Plan Sponsor that would be aggregated with any terminated arrangements under Treasury Regulations Section 1.409A-1(c) are liquidated and terminated;

(ii) The Plan is terminated within thirty (30) days preceding or twelve (12) months following a change in control that constitutes a "change in control event" within the meaning of such term under Treasury Regulations Section 1.409A-3(i)(5); and

(iii) Participants receive all amounts of deferred compensation from the plans identified in Section 7.1(c)(i) above within twelve (12) months of the date the Plan Sponsor takes all steps to terminate and liquidate the plans identified in Section 7.1(c)(i) above.]

7.2Amendment.  The Plan Sponsor may, at any time, amend or modify this Plan in whole or in part; provided, however, that, except to the extent necessary to bring the Plan into compliance with Section 409A: (i) no amendment or modification shall be effective to decrease the value or vested percentage of a Participant's Account(s), in existence at the time an amendment or modification is made, and (ii) no amendment or modification shall materially and adversely affect the Participant's rights to be credited with additional amounts on such Account(s), or otherwise materially and adversely affect the Participant's rights with respect to such Account(s). The amendment or modification of this Plan shall have no effect on any Participant or Beneficiary who has become entitled to the payment of benefits under this Plan as of the date of the amendment or modification.

ARTICLE 8.Administration

8.1Plan Administrator Duties.  The Plan Administrator shall be responsible for the management, operation and administration of the Plan. The Plan Administrator shall act at meetings by affirmative vote of a majority of its members. Any action permitted to be taken at a meeting may be taken without a meeting if, prior to such action, a unanimous written consent to the action is signed by all members and such written consent is filed with the minutes of the proceedings of the Plan Administrator. A member shall not vote or act upon any matter which relates solely to himself or herself as a Participant. The Chair or any other member or members of the Plan Administrator designated by the Chair may execute any certificate or other written direction on behalf of the Plan Administrator. When making a determination or calculation, the Plan Administrator shall be entitled to rely on information furnished by a Participant or the Plan Sponsor. No provision of this Plan shall be construed as imposing on the Plan Administrator any fiduciary duty under ERISA or other law, or any duty similar to any fiduciary duty under ERISA or other law.

8.2Plan Administrator Authority.  The Plan Administrator shall enforce this Plan in accordance with its terms, shall be charged with the general administration of this Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

(a) To construe and interpret the terms and provisions of this Plan;

(b) To compute and certify the amount and kind of benefits payable to Participants and their Beneficiaries; to determine the time and manner in which such benefits are paid; and to determine the amount of any withholding taxes to be deducted;

(c) To maintain all records that may be necessary for the administration of this Plan;

(d) To provide for the disclosure of all information and the filing or provision of all reports and statements to Participants, Beneficiaries or governmental agencies as shall be required by law;

(e) To make and publish such rules for the regulation of this Plan and procedures for the administration of this Plan as are not inconsistent with the terms hereof;

(f) To administer this Plan's claims procedures;

(g) To approve election forms and procedures for use under this Plan; and

(h) To appoint a plan record keeper or any other agent, and to delegate to them such powers and duties in connection with the administration of this Plan as the Plan Administrator may from time to time prescribe.

8.3Binding Effect of Decision. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of this Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Plan.

8.4Compensation, Expenses and Indemnity. The Plan Administrator shall serve without compensation for services rendered hereunder. The Plan Administrator is authorized at the expense of the Plan Sponsor to employ such legal counsel and/or Plan record keeper as it may deem advisable to assist in the performance of its duties hereunder. Expense and fees in connection with the administration of this Plan shall be paid by the Plan Sponsor.

8.5Plan Sponsor Information. To enable the Plan Administrator to perform its functions, the Plan Sponsor shall supply full and timely information to the Plan Administrator, on all matters relating to the Base Salary of its Participants, the date and circumstances of the Disability, death, or Separation from Service of its employees who are Participants, and such other pertinent information as the Plan Administrator may reasonably require.

8.6Periodic Statements. Under procedures established by the Plan Administrator, a Participant shall be provided a statement of account on an annual basis (or more frequently as the Plan Administrator shall determine) with respect to such Participant's Accounts.

ARTICLE 9.Claims Procedures

9.1Claims Procedure. This Article is based on final regulations issued by the Department of Labor and published in the Federal Register on November 21, 2000 and codified in Section 2560.503-1 of the Department of Labor Regulations. If any provision of this Article conflicts with the requirements of those regulations, the requirements of those regulations will prevail.

(a) Claim. A Participant or Beneficiary (hereinafter referred to as a "Claimant") who believes he or she is entitled to any Plan benefit under this Plan may file a claim with the Plan Administrator. The Plan Administrator shall review the claim itself or appoint an individual or entity to review the claim.

(b) Claim Decision. The Claimant shall be notified within ninety (90) days after the claim is filed whether the claim is allowed or denied (forty-five (45) days in the case of a claim involving Disability benefits), unless, for claims not involving Disability benefits, the Claimant receives written notice from the Plan Administrator or appointee of the Plan Administrator prior to the end of the ninety (90) day period stating that special circumstances require an extension of the time for decision. Such extension is not to extend beyond the day which is one hundred eighty (180) days after the day the claim is filed.  In the case of a claim involving Disability benefits, the Plan Administrator will notify the Claimant within the initial forty-five (45) day period that the Plan Administrator needs up to an additional thirty (30) days to review the Claimant's claim.  If the Plan Administrator determines that the additional thirty (30) day period is not sufficient and that additional time is necessary to review the Claimant's claim for Disability benefits, the Plan Administrator may notify the Claimant of an additional thirty (30) day extension.  If the Plan Administrator denies the claim, it must provide to the Claimant, in writing or by electronic communication:

(i) The specific reasons for such denial;

(ii) Specific reference to pertinent provisions of this Plan on which such denial is based;

(iii) A description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation why such material or such information is necessary;

(iv) In the case of any claim involving Disability benefits, a copy of any internal rule, guideline, protocol, or other similar criterion relied upon in making the initial determination or a statement that such a rule, guideline, protocol, or other criterion was relied upon in making the determination and that a copy of such rule will be provided to the Claimant free of charge at the Claimant's request; and

(v) A description of the Plan's appeal procedures and the time limits applicable to such procedures, including a statement of the Claimant's right to bring a civil action under Section 502(a) of ERISA following a denial of the appeal of the denial of the benefits claim.

(c) Review Procedures.  A request for review of a denied claim must be made in writing to the Plan Administrator within sixty (60) days after receiving notice of denial (one hundred eighty (180) days in the case of a claim involving Disability benefits). The decision upon review will be made within sixty (60) days after the Plan Administrator's receipt of a request for review (forty-five (45) days in the case of a claim involving Disability benefits), unless special circumstances require an extension of time for processing, in which case a decision will be rendered not later than one hundred twenty (120) days after receipt of a request for review (ninety (90) days in the case of a claim for Disability benefits). A notice of such an extension must be provided to the Claimant within the initial sixty (60) day period (the initial forty-five (45) day period in the case of a claim for Disability benefits) and must explain the special circumstances and provide an expected date of decision.  The reviewer shall afford the Claimant an opportunity to review and receive, without charge, all relevant documents, information and records and to submit issues and comments in writing to the Plan Administrator. The reviewer shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim regardless of whether the information was submitted or considered in the benefit determination.  Upon completion of its review of an adverse initial claim determination, the Plan Administrator will give the Claimant, in writing or by electronic notification, a notice containing:

(i) its decision;

(ii) the specific reasons for the decision;

(iii) the relevant Plan provisions on which its decision is based;

(iv) a statement that the Claimant is entitled to receive, upon request and without charge, reasonable access to, and copies of, all documents, records and other information in the Plan's files which is relevant to the Claimant's claim for benefit;

(v) a statement describing the Claimant's right to bring an action for judicial review under Section 502(a) of ERISA; and

(vi) In the case of any claim involving Disability benefits, a copy of any internal rule, guideline, protocol, or other similar criterion that was relied upon in making the adverse determination on review or a statement that a copy of the rule, guideline, protocol or other similar criterion was relied upon in making the adverse determination on review and that a copy of such rule, guideline, protocol, or similar criterion will be provided without charge to the Claimant upon request.

Unless a Claimant voluntarily avails himself or herself of the procedures set forth in Section 9.2 below, all interpretations, determinations and decisions of the Plan Administrator in respect of any claim shall be made in its sole discretion based on the applicable Plan documents and shall be final, conclusive and binding on all parties.

(d) Calculation of Time Periods. For purposes of the time periods specified in this Article, the period of time during which a benefit determination is required to be made begins at the time a claim is filed in accordance with the Plan procedures without regard to whether all the information necessary to make a decision accompanies the claim. If a period of time is extended due to a Claimant's failure to submit all information necessary, the period for making the determination shall be tolled from the date the notification is sent to the Claimant until the date the Claimant responds.

(e) Failure of Plan to Follow Procedures. If the Plan fails to follow the claims procedure required by this Article, a Claimant shall be entitled to pursue any available remedy under Section 502(a) of ERISA on the basis that the Plan has failed to provide reasonable claims procedure that would yield a decision on the merits of the claim.

(f) Failure of Claimant to Follow Procedures. A Claimant's compliance with the foregoing provisions of this Article is a mandatory prerequisite to the Claimant's right to commence any legal action with respect to any claim for benefits under the Plan.

9.2Arbitration of Claims.  Instead of pursuing his or her claim in court, a Participant may voluntarily agree that all claims or controversies arising out of or in connection with this Plan shall, subject to the initial review provided for in the foregoing provisions of this Article, be resolved through arbitration as provided in this Article. Except as otherwise provided or by mutual agreement of the parties, any arbitration shall be administered under and by the Judicial Arbitration & Mediation Services, Inc. ("JAMS"), in accordance with the JAMS procedure then in effect. The arbitration shall be held in the JAMS office nearest to where the Claimant is or was last employed by the Plan Sponsor or at a mutually agreeable location. The prevailing party in the arbitration shall have the right to recover its reasonable attorney's fees, disbursements and costs of the arbitration (including enforcement of the arbitration decision), subject to any contrary determination by the arbitrator.  If the Claimant voluntarily avails himself or herself of the procedures set forth in this Section 9.2, all determinations of the arbitrators in respect of any claim shall be final, conclusive and binding on all parties.

ARTICLE 10.The Trust

10.1Establishment of Trust.  The Plan Sponsor may establish a Trust. If the Plan Sponsor establishes a Trust, all benefits payable under this Plan to a Participant shall be paid directly by the Plan Sponsor from the Trust. To the extent such benefits are not paid from the Trust, the benefits shall be paid from the general assets of the Plan Sponsor.  The Trust, if any, shall be an irrevocable grantor trust which conforms to the terms of the model trust as described in IRS Revenue Procedure 92-64, I.R.B. 1992-33.  If the Plan Sponsor establishes a Trust, the assets of the Trust will be subject to the claims of the Plan Sponsor's creditors in the event of its insolvency. Except as may otherwise be provided under the Trust, the Plan Sponsor shall not be obligated to set aside, earmark or escrow any funds or other assets to satisfy its obligations under this Plan, and the Participant and/or his or her designated Beneficiaries shall not have any property interest in any specific assets of the Plan Sponsor other than the unsecured right to receive payments from the Plan Sponsor, as provided in this Plan.

10.2Interrelationship of the Plan and the Trust.  The provisions of the Plan shall govern the rights of a Participant to receive distributions pursuant to the Plan.  The provisions of the Trust (if established) shall govern the rights of the Participant and the creditors of the Plan Sponsor to the assets transferred to the Trust. Each shall at all times remain liable to carry out its obligations under the Plan.  The Plan Sponsor's obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust.

10.3Contribution to the Trust.  Amounts may be contributed by the Plan Sponsor to the Trust at the sole discretion of the Plan Sponsor.

ARTICLE 11.Miscellaneous

11.1Validity.  In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein. To the extent any provision of the Plan is determined by the Plan Administrator (acting in good faith), the Internal Revenue Service, the United States Department of the Treasury or a court of competent jurisdiction to fail to comply with Section 409A with respect to any Participant or Participants, such provision shall have no force or effect with respect to such Participant or Participants.

11.2Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part hereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment (except to the extent the Plan Sponsor may be required to garnish amounts from payments due under this Plan pursuant to applicable law) or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participants' or any other persons' bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise. If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or purports to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber transfer, hypothecate, alienate or convey in advance of actual receipt, the amount, if any, payable hereunder, or any part thereof, the Plan Administrator, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the Plan Administrator shall direct.

11.3Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Plan Sponsor and the Participant. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Plan Sponsor as an employee or to interfere with the right of the Plan Sponsor to discipline or discharge the Participant at any time.

11.4Governing Law. Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the Commonwealth of Pennsylvania, without regard to its conflicts of laws principles.

11.5Notice. Any notice, consent or demand required or permitted to be given under the provisions of this Plan shall be in writing and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed, it shall be sent by United States certified mail, postage prepaid, addressed to the addressee's last known address as shown on the records of the Plan Sponsor. The date of such mailing shall be deemed the date of notice consent or demand.  Any person may change the address to which notice is to be sent by giving notice of the change of address in the manner aforesaid.

11.6Coordination with Other Benefits.  The benefits provided for a Participant and Participant's Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for Employees of the Plan Sponsor. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

11.7Compliance.  A Participant shall have no right to receive payment with respect to the Participant's Account balance until all legal and contractual obligations of the Plan Sponsor relating to establishment of the Plan and the making of such payments shall have been complied with in full.

11.8Successor Company.  The Plan will be continued after a sale of assets of the Plan Sponsor, or a merger or consolidation of the Plan Sponsor into another corporation or entity.

11.9Section 409A Compliance. The Plan is intended to comply with the applicable requirements of Section 409A, and shall be administered in accordance with Section 409A to the extent Section 409A applies to the Plan.  Notwithstanding anything in the Plan to the contrary, distributions from the Plan may only be made in a manner, and upon an event, permitted by Section 409A.  If a payment is not made by the designated payment date under the Plan, the payment shall be made by December 31 of the calendar year in which the designated payment date occurs.  Each installment payment shall be treated as a separate payment for purposes of Section 409A.  To the extent that any provision of the Plan would cause a conflict with the applicable requirements of Section 409A, or would cause the administration of the Plan to fail to satisfy the applicable requirements of Section 409A, such provision shall be deemed null and void.  In no event shall a Participant, directly or indirectly, designate the calendar year of payment.  Notwithstanding anything in the Plan to the contrary, this Plan may be amended by the Plan Sponsor at any time, retroactively if required, to the extent required to conform the Plan to Section 409A.  No election made by a Participant hereunder, and no change made by a Participant to a previous election shall be accepted by the Plan Sponsor if the Plan Sponsor determines that acceptance of such election or change could violate any of the requirements of Section 409A, resulting in early taxation and penalties.

[Signature Page Follows]

IN WITNESS WHEREOF, the Plan Sponsor has signed this Plan document as of ____________________________, 20___.

ATTEST/WITNESS	For:  Participant
(Signature)	(Signature)
(Print Name)	(Print Name)
	(Title)
	(Date)
ATTEST/WITNESS	For:  The York Water Company
(Signature)	(Signature)
(Print Name)	(Print Name)
	(Title)
	(Date)

APPENDIX A

Employee Monthly Enhancement Factor

PLAN ENROLLMENT KIT

for the

The York Water Company

Deferred Compensation Plan

Contents:

Participant Data

Participation Agreement

Plan Year Restatement Enrollment Form

PLEASE COMPLETE EACH FORM INCLUDED IN THIS KIT.  PLEASE PRINT IN INK.  UPON COMPLETION OF THIS PLAN ENROLLMENT KIT, PLEASE REVIEW TO ENSURE THAT EACH FORM IS COMPLETELY FILLED OUT AND THAT YOU HAVE SIGNED WHERE APPLICABLE.

RETURN ALL FORMS TO YOUR PLAN ADMINISTRATOR

The York Water Company

Deferred Compensation Plan

PARTICIPANT DATA

INSTRUCTIONS:  Please complete all information below.

(Please print)

Last Name	First Name				Middle Initial
Address		City		State		Zip Code
Date of Birth (mm/dd/yyyy)			Date of Hire (mm/dd/yyyy)

THE YORK WATER COMPANY "AMENDED AND RESTATED DEFERRED COMPENSATION PLAN"

PARTICIPATION AGREEMENT
(Please print)
Last Name	First Name	Middle Initial

The Plan Sponsor and the Plan Administrator designate the above named Eligible Employee as a Plan Participant. All capitalized terms used herein are defined in the The York Water Company Amended and Restated Deferred Compensation Plan.

In consideration of his or her designation as a Participant, the undersigned Eligible Employee hereby agrees and acknowledges as follows:

1. I have received a copy of The York Water Company Amended and Restated Deferred Compensation Plan, as currently in effect.

2. I agree to be bound by all of the terms and conditions of the Plan, including the determinations of the Plan Administrator, and to perform any and all acts required by me hereunder.

3. I have the right to designate the Beneficiary or Beneficiaries, and thereafter to change the Beneficiary or Beneficiaries, of any death benefit payable under the Plan, by completing and delivering to the Plan Administrator a form designating his or her Beneficiary.

4. I understand that the Plan may have to be amended to comply with Section 409A, and I hereby agree to execute any documents necessary to make such amendments.

5. I understand that my participation in the Plan can have tax and financial consequences for my Beneficiaries and me. I have had the opportunity to consult with my own tax, financial and legal advisors before deciding to participate in the Plan.

6. I understand that my Plan benefits are subject to the claims of my Plan Sponsor's creditors should my Plan Sponsor become bankrupt or insolvent.

7. I understand that the Plan Sponsor Contributions, Account Earnings, Tax Savings (if any) and Enhancement Factor shall vest based on Section 4.1 of the Plan.

8. I understand that the Plan Agreement and any accompanying forms shall be interpreted in accordance with, and incorporate the terms and conditions required by Section 409A. I further understand that the Plan Administrator may, in its discretion, adopt such amendments to the Plan and any accompanying forms or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Plan Administrator determines are necessary or appropriate to comply with the requirements of Section 409A. Finally, I understand that the time or form of distributions that I may be allowed to elect (if any) may not be accelerated except as otherwise permitted by Section 409A.

AGREED AND ACCEPTED BY THE PARTICIPANT
Signature of Participant	Date
AGREED AND ACCEPTED BY THE PLAN SPONSOR
For the Plan Sponsor	Date

The York Water Company Deferred Compensation Plan

ENROLLMENT FORM

(Please print)

Last Name	First Name	Middle Initial
SECTION I:  DEFERRAL ELECTIONS

I hereby elect to defer my Base Salary as indicated below. I understand that this deferral election is subject to all of the applicable terms of the Plan, including the requirement that I may not change my election once made for the current Plan Year.  I further understand that I am obligated to continue this deduction for eight (8) years.  I further understand that I may elect to continue the deduction for up to an additional three (3) years immediately following the completion of the initial eight (8) years.  All capitalized terms used herein are defined in the The York Water Company Amended and Restated Deferred Compensation Plan, unless otherwise indicated by the context.

☐I elect to defer Base Salary for the period indicate above.

Base Salary deferral: _______% (2.5% ______ OR 5.0% _______)

I understand that the Company will contribute an amount equal to 2.5% of my base salary pursuant to section 3.2.

SECTION II:  BENEFICIARY DESIGNATION

I designate the Beneficiary(ies) below to receive any benefits payable under this Plan on account of my death:

PRIMARY BENEFICIARY(IES): Name   Percentage of Benefits   Relationship to Participant   Social Security Number  

CONTINGENT BENEFICIARY(IES) (Will receive indicated portions of my Vested Account balance if no primary Beneficiaries survive the Participant.)

Name	Percentage of Benefits		Relationship to Participant	Social Security Number
AGREED AND ACCEPTED BY THE PARTICIPANT
Signature of Participant		Date
AGREED AND ACCEPTED BY THE PLAN SPONSOR
For the Plan Sponsor		Date

Schedule 10.18

Name	Enhancement Factor
Jeffrey R. Hines	1.110
Kathleen M. Miller	-
Joseph T. Hand	-
Vernon L. Bracey	-
Bruce C. McIntosh	-
Mark S. Snyder	-

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Mar. 07, 2016	Jun. 30, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	YORK WATER CO
Entity Central Index Key	0000108985
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 268,720,487
Entity Common Stock, Shares Outstanding		12,826,147
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2015

XML

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
ASSETS
UTILITY PLANT, at original cost	$ 329,415	$ 316,525
Plant acquisition adjustments	(3,724)	(3,522)
Accumulated depreciation	(64,271)	(59,809)
Net utility plant	261,420	253,194
OTHER PHYSICAL PROPERTY:
Net of accumulated depreciation of $329 in 2015 and $286 in 2014	769	765
CURRENT ASSETS:
Cash and cash equivalents	2,879	1,488
Restricted cash	0	7
Accounts receivable, net of reserves of $315 in 2015 and $325 in 2014	3,535	3,991
Unbilled revenues	2,614	2,377
Recoverable income taxes	1,049	957
Materials and supplies inventories, at cost	771	771
Prepaid expenses	729	584
Deferred income taxes	215	1,058
Total current assets	11,792	11,233
OTHER LONG-TERM ASSETS:
Deferred debt expense	2,743	2,573
Notes receivable	255	266
Deferred regulatory assets	32,996	32,614
Other assets	3,516	3,694
Total other long-term assets	39,510	39,147
Total Assets	313,491	304,339
COMMON STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 12,812,377 shares in 2015 and 12,830,521 shares in 2014	77,317	77,556
Retained earnings	31,753	27,007
Total common stockholders' equity	109,070	104,563
PREFERRED STOCK, authorized 500,000 shares, no shares issued	0	0
LONG-TERM DEBT, excluding current portion	$ 87,261	$ 84,842
COMMITMENTS
CURRENT LIABILITIES:
Current portion of long-term debt	$ 44	$ 43
Accounts payable	1,772	1,589
Dividends payable	1,708	1,647
Accrued compensation and benefits	1,174	1,078
Accrued interest	976	1,027
Other accrued expenses	523	546
Total current liabilities	6,197	5,930
DEFERRED CREDITS:
Customers' advances for construction	7,500	10,712
Deferred income taxes	50,495	46,024
Deferred employee benefits	11,079	13,727
Other deferred credits	6,959	7,489
Total deferred credits	76,033	77,952
Contributions in aid of construction	34,930	31,052
Total Stockholders' Equity and Liabilities	$ 313,491	$ 304,339

XML

Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
OTHER PHYSICAL PROPERTY:
Other physical property, accumulated depreciation	$ 329	$ 286
CURRENT ASSETS:
Receivables, reserves	$ 315	$ 325
COMMON STOCKHOLDERS' EQUITY:
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, authorized (in shares)	46,500,000	46,500,000
Common stock, issued (in shares)	12,812,377	12,830,521
Common stock, outstanding (in shares)	12,812,377	12,830,521
Preferred stock, authorized (in shares)	500,000	500,000
Preferred stock, issued (in shares)	0	0

XML

Statements of Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
OPERATING REVENUES:
Residential	$ 29,682	$ 29,079	$ 26,796
Commercial and industrial	13,822	13,267	12,299
Other	3,585	3,554	3,288
Operating revenues	47,089	45,900	42,383
OPERATING EXPENSES:
Operation and maintenance	8,066	7,968	7,350
Administrative and general	9,082	8,812	7,406
Depreciation and amortization	6,151	5,932	5,744
Taxes other than income taxes	1,129	1,111	1,122
Operating expenses	24,428	23,823	21,622
Operating income	22,661	22,077	20,761
OTHER INCOME (EXPENSES):
Interest on debt	(5,053)	(5,087)	(5,244)
Allowance for funds used during construction	206	210	82
Gain on sale of land	0	316	0
Other income (expenses), net	(585)	(1,155)	(133)
Other income (expenses)	(5,432)	(5,716)	(5,295)
Income before income taxes	17,229	16,361	15,466
Income taxes	4,740	4,877	5,812
Net Income	$ 12,489	$ 11,484	$ 9,654
Basic Earnings Per Share (in dollars per share)	$ 0.97	$ 0.89	$ 0.75
Cash Dividends Declared Per Share (in shares)	$ 0.6040	$ 0.5788	$ 0.5580

XML

Statements of Common Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2012	$ 79,299	$ 20,526	$ 99,825
Balance (in shares) at Dec. 31, 2012	12,918,633
Net income	$ 0	9,654	9,654
Dividends	0	(7,214)	(7,214)
Retirement of common stock	$ (1,772)	0	$ (1,772)
Retirement of common stock (in shares)	(94,414)		(94,414)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans	$ 3,018	0	$ 3,018
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans (in shares)	155,062
Balance at Dec. 31, 2013	$ 80,545	22,966	103,511
Balance (in shares) at Dec. 31, 2013	12,979,281
Net income	$ 0	11,484	11,484
Dividends	0	(7,443)	(7,443)
Retirement of common stock	$ (5,692)	0	$ (5,692)
Retirement of common stock (in shares)	(282,570)		(282,570)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans	$ 2,703	0	$ 2,703
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans (in shares)	133,810
Balance at Dec. 31, 2014	$ 77,556	27,007	$ 104,563
Balance (in shares) at Dec. 31, 2014	12,830,521		12,830,521
Net income	$ 0	12,489	$ 12,489
Dividends	0	(7,743)	(7,743)
Retirement of common stock	$ (2,546)	0	$ (2,546)
Retirement of common stock (in shares)	(121,012)		(121,012)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans	$ 2,307	0	$ 2,307
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans (in shares)	102,868
Balance at Dec. 31, 2015	$ 77,317	$ 31,753	$ 109,070
Balance (in shares) at Dec. 31, 2015	12,812,377		12,812,377

XML

Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 12,489	$ 11,484	$ 9,654
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of land	0	(316)	0
Depreciation and amortization	6,151	5,932	5,744
Increase in deferred income taxes	2,270	4,753	1,939
Other	189	199	213
Changes in assets and liabilities:
(Increase) decrease in accounts receivable and unbilled revenues	(73)	(632)	11
Increase in recoverable income taxes	(92)	(957)	0
Increase in materials and supplies, prepaid expenses, regulatory and other assets	(2,339)	(11,438)	(1,056)
Increase in accounts payable, accrued compensation and benefits, accrued expenses, deferred employee benefits, and other deferred credits	2,166	11,502	306
Increase (decrease) in accrued interest and taxes	(51)	(1,761)	1,627
Net cash provided by operating activities	20,710	18,766	18,438
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions, including debt portion of allowance for funds used during construction of $115 in 2015, $117 in 2014 and $46 in 2013	(13,844)	(14,139)	(9,852)
Acquisitions of water and wastewater systems	(352)	(369)	(28)
Proceeds from sale of land	0	346	0
Decrease in compensating balance	0	0	500
Decrease in notes receivable	11	40	32
Net cash used in investing activities	(14,185)	(14,122)	(9,348)
CASH FLOWS FROM FINANCING ACTIVITIES:
Customers' advances for construction and contributions in aid of construction	1,117	638	733
Repayments of customer advances	(447)	(419)	(313)
Proceeds of long-term debt issues	14,301	14,880	0
Debt issuance costs	(298)	(506)	0
Repayments of long-term debt	(11,886)	(14,923)	(47)
Repurchase of common stock	(2,546)	(5,692)	(1,772)
Issuance of common stock	2,307	2,703	3,018
Dividends paid	(7,682)	(7,402)	(7,156)
Net cash used in financing activities	(5,134)	(10,721)	(5,537)
Net change in cash and cash equivalents	1,391	(6,077)	3,553
Cash and cash equivalents at beginning of period	1,488	7,565	4,012
Cash and cash equivalents at end of period	2,879	1,488	7,565
Cash paid during the period for:
Interest, net of amounts capitalized	4,985	5,007	5,198
Income taxes	$ 2,155	$ 2,808	$ 1,921
Supplemental schedule of non-cash investing and financing activities:
Accounts payable includes $720 in 2015, $833 in 2014 and $974 in 2013 for the construction of utility plant.

XML

Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions, debt portion of allowance for funds used during construction	$ 115	$ 117	$ 46
Supplemental schedule of non-cash investing and financing activities:
Accounts payable, construction of utility plant	$ 720	$ 833	$ 974

XML

Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Significant Accounting Policies [Abstract]

Significant Accounting Policies

1. Significant Accounting Policies

The primary business of The York Water Company is to impound, purify and distribute water.  The Company also operates two wastewater collection and treatment systems.  The Company operates within its franchised territory located in York and Adams Counties, Pennsylvania, and is subject to regulation by the Pennsylvania Public Utility Commission, or PPUC.

The following summarizes the significant accounting policies employed by The York Water Company.

Utility Plant and Depreciation

The cost of additions includes contracted cost, direct labor and fringe benefits, materials, overhead and, for certain utility plant, allowance for funds used during construction.  In accordance with regulatory accounting requirements, water and wastewater systems acquired are recorded at estimated original cost of utility plant when first devoted to utility service and the applicable depreciation is recorded to accumulated depreciation.  The difference between the estimated original cost less applicable accumulated depreciation, and the purchase price and acquisition costs is recorded as an acquisition adjustment within utility plant as permitted by the PPUC.  At December 31, 2015 and 2014, utility plant includes a net credit acquisition adjustment of $3,724 and $3,522, respectively.  For those amounts approved by the PPUC, the net acquisition adjustment is being amortized over the remaining life of the respective assets. Certain amounts are still awaiting approval from the PPUC before amortization will commence.  Amortization amounted to $58 in 2015, $54 in 2014, and $50 in 2013.

Upon normal retirement of depreciable property, the estimated or actual cost of the asset is credited to the utility plant account, and such amounts, together with the cost of removal less salvage value, are charged to the reserve for depreciation.  To the extent the Company recovers cost of removal or other retirement costs through rates after the retirement costs are incurred, a regulatory asset is reported.  Gains or losses from abnormal retirements are reflected in income currently.

The straight-line remaining life method is used to compute depreciation on utility plant cost, exclusive of land and land rights.  Annual provisions for depreciation of transportation and mechanical equipment included in utility plant are computed on a straight-line basis over the estimated service lives.  Such provisions are charged to clearing accounts and apportioned therefrom to operating expenses and other accounts in accordance with the Uniform System of Accounts as prescribed by the PPUC.

The Company charges to maintenance expense the cost of repairs and replacements and renewals of minor items of property.  Maintenance of transportation equipment is charged to clearing accounts and apportioned therefrom in a manner similar to depreciation.  The cost of replacements, renewals and betterments of units of property is capitalized to the utility plant accounts.

The following remaining lives are used for financial reporting purposes:

	December 31,				Approximate range
Utility Plant Asset Category	2015		2014		of remaining lives
Mains and accessories	$	170,991	$	164,627	10 – 83 years
Services, meters and hydrants		66,267		63,479	19 – 55 years
Operations structures, reservoirs and water tanks		44,739		43,654	12 – 38 years
Pumping and treatment equipment		27,664		25,616	3 – 34 years
Office, transportation and operating equipment		11,725		11,216	3 – 21 years
Land and other non-depreciable assets		3,172		3,166		-
Utility plant in service		324,558		311,758
Construction work in progress		4,857		4,767		-
Total Utility Plant	$	329,415	$	316,525

The effective rate of depreciation was 2.24% in 2015, 2.26% in 2014, and 2.28% in 2013 on average utility plant, net of customers' advances and contributions. Larger depreciation provisions resulting from allowable accelerated methods are deducted for tax purposes.

Cash and Cash Equivalents

For the purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents except for those instruments earmarked to fund construction expenditures or repay long-term debt.

The Company periodically maintains cash balances in major financial institutions in excess of the federally insured limit by the Federal Deposit Insurance Corporation (FDIC).  The Company has not experienced any losses and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Restricted Cash

The Company served as the custodian for an escrow account that was used to rehabilitate a neighborhood within the service territory of the Company.  The deposits made by various community organizations were classified as restricted cash on the balance sheets of the Company.  The project was completed and the remaining cash was disbursed in 2015.

In 2012, the Company had a compensating balance requirement for one of its lines of credit which was recorded as Restricted Cash – compensating balance.  This requirement was removed in 2013.

Accounts Receivable

Accounts receivable are stated at outstanding balances, less a reserve for doubtful accounts.  The reserve for doubtful accounts is established through provisions charged against income.  Accounts deemed to be uncollectible are charged against the reserve and subsequent recoveries, if any, are credited to the reserve.  The reserve for doubtful accounts is maintained at a level considered adequate to provide for losses that can be reasonably anticipated.  Management's periodic evaluation of the adequacy of the reserve is 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.  This evaluation is inherently subjective.  Unpaid balances remaining after the stated payment terms are considered past due.

Revenue Recognition

Operating revenues include amounts billed to water customers on a cycle basis and unbilled amounts based on actual and estimated usage from the latest meter reading to the end of the accounting period.  Operating revenues also include amounts billed to wastewater customers as either a flat monthly fee or a metered rate based on water consumption.  The metered wastewater revenue includes actual and estimated usage from the latest meter reading to the end of the accounting period.

Materials and Supplies Inventories

Materials and supplies inventories are stated at cost.  Costs are determined using the average cost method.

Deferred Debt Expense

Deferred debt expense is amortized on a straight-line basis over the term of the related debt.

Notes Receivable

Notes receivable are recorded at cost and represent amounts due from various municipalities for construction of water mains in their particular municipality.  Management, considering current information and events regarding the borrowers' ability to repay their obligations, considers a note to be impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the note agreement.  When a note is considered to be impaired, the carrying value of the note is written down.  The amount of the impairment is measured based on the present value of expected future cash flows discounted at the note's effective interest rate.

Regulatory Assets and Liabilities

The Company is subject to the provisions of generally accepted accounting principles regarding rate-regulated entities.  The accounting standards provide for the recognition of regulatory assets and liabilities as allowed by regulators for costs or credits that are reflected in current customer rates or are considered probable of being included in future rates.  The regulatory assets or liabilities are then relieved as the cost or credit is reflected in rates.  Regulatory assets represent costs that are expected to be fully recovered from customers in future rates while regulatory liabilities represent amounts that are expected to be refunded to customers in future rates.  These deferred costs have been excluded from the Company's rate base and, therefore, no return is being earned on the unamortized balances.

Regulatory assets and liabilities are comprised of the following:

	December 31,				Remaining Recovery
	2015		2014		Periods
Assets
Income taxes	$	18,389	$	15,800	Various
Postretirement benefits		9,819		12,493	5 – 10 years
Unrealized swap losses		2,481		2,561	1 – 14 years
Utility plant retirement costs		2,247		1,561	5 years
Service life study expenses		3		5	2 years
Rate case filing expenses		57		194	1 years
		32,996		32,614
Liabilities
IRS TPR catch-up deduction		3,887		4,314	Not yet known
Income taxes		776		806	1 – 50 years
	$	4,663	$	5,120

The regulatory asset for income taxes include (a) deferred state income taxes related primarily to differences between book and tax depreciation expense, (b) deferred income taxes related to the differences that arise between specific asset improvement costs capitalized for book purposes and deducted as a repair expense for tax purposes, and (c) deferred income taxes associated with the gross-up of revenues related to the differences.  These assets are recognized for ratemaking purposes on a cash or flow-through basis and will be recovered in rates as they reverse.

Postretirement benefits include the difference between contributions and deferred pension expense and the underfunded status of the pension plans.  The underfunded status represents the difference between the projected benefit obligation and the fair market value of the assets.  This asset is expected to be recovered in future years as additional contributions are made or market conditions improve.  The recovery period is dependent on contributions made to the plans, plan asset performance and the discount rate used to value the obligations.  The period is estimated at between 5 and 10 years.

The Company uses regulatory accounting treatment to defer the mark-to-market unrealized gains and losses on its interest rate swap to reflect that the gain or loss is included in the ratemaking formula when the transaction actually settles.  The value of the swap as of the balance sheet date is recorded as part of other deferred credits.  Realized gains or losses on the swap will be recorded as interest expense in the statement of income over its remaining life of 14 years.

Utility plant retirement costs, including cost of removal, represents costs already incurred which are expected to be recovered over a five-year period in rates, through depreciation expense.  Service life study and rate case filing expenses are deferred and amortized over their remaining lives of two and one years, respectively.

The regulatory liability for the Internal Revenue Service, or IRS, tangible property regulations, or TPR, catch-up deduction represents the tax benefits realized on the Company's 2014 income tax return for qualifying capital expenditures made prior to 2014.  In 2015, upon final determination of the TPR amounts for its income tax return, the Company reclassified the portion of TPR related to dispositions to deferred taxes and deferred tax liabilities in compliance with the IRS regulations.  The Company will seek approval from the PPUC in its next rate filing to amortize the remaining catch-up deduction.

The regulatory liability for income taxes relates mainly to deferred investment tax credits, and additionally to deferred taxes related to postretirement death benefits and bad debts.  These liabilities will be given back to customers in rates as tax deductions occur over the next 1-50 years.

Regulatory liabilities are part of other accrued expenses and other deferred credits on the balance sheets.

Other Assets

Other assets consist mainly of the cash value of life insurance policies held as an investment by the Company for reimbursement of costs and benefits associated with its supplemental retirement and deferred compensation programs.

Customers' Advances for Construction

Customer advances are cash payments from developers, municipalities, customers or builders for construction of utility plant, and are refundable upon completion of construction, as operating revenues are earned.  If the Company loans funds for construction to the customer, the refund amount is credited to the note receivable rather than paid out in cash.  After all refunds to which the customer is entitled are made, any remaining balance is transferred to contributions in aid of construction.  From 1986 to 1996 when customer advances were taxable income to the Company, additional funds were collected from customers to cover the taxes.  Those funds were recorded as a liability within Customer Advances for Construction and are being amortized as deferred income over the tax life of the underlying assets.

Contributions in Aid of Construction

Contributions in Aid of Construction is composed of (i) direct, non-refundable contributions from developers, customers or builders for construction of water infrastructure and (ii) customer advances that have become non-refundable.  Contributions in aid of construction are deducted from the Company's rate base, and therefore, no return is earned on property financed with contributions.  The PPUC requires that contributions received remain on the Company's balance sheets indefinitely as a long-term liability.

Interest Rate Swap Agreement

The Company is exposed to certain risks relating to its ongoing business operations.  The primary risk managed by using derivative instruments is interest rate risk.  The Company utilizes an interest rate swap agreement to convert its variable-rate debt to a fixed rate.  Interest rate swaps are contracts in which a series of interest rate cash flows are exchanged over a prescribed period.  The notional amount on which the interest payments are based is not exchanged.  The Company has designated the interest rate swap agreement as a cash flow hedge, classified as a financial derivative used for non-trading activities.

The accounting standards regarding accounting for derivatives and hedging activities require companies to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheets.  In accordance with the standards, the interest rate swap is recorded on the balance sheets in other deferred credits at fair value.

The Company uses regulatory accounting treatment rather than hedge accounting to defer the unrealized gains and losses on its interest rate swap.  Instead of the effective portion being recorded as other comprehensive income and the ineffective portion being recognized in earnings, the entire unrealized swap value is recorded as a regulatory asset.  Based on current ratemaking treatment, the Company expects the gains and losses to be recognized in rates and in interest expense as the swap settlements occur.  Swap settlements are recorded in the income statement with the hedged item as interest expense.  Swap settlements resulted in the reclassification from regulatory assets to interest expense of $366 in 2015, $368 in 2014, and $366 in 2013.  The overall swap result was a (gain) loss of $285 in 2015, $1,318 in 2014, and $(830) in 2013.  During the twelve months ending December 31, 2016, the Company expects to reclassify $328 (before tax) from regulatory assets to interest expense.

The interest rate swap will expire on October 1, 2029.

Income Taxes

Certain income and expense items are accounted for in different time periods for financial reporting than for income tax reporting purposes.

Deferred income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  To the extent such income taxes increase or decrease future rates, an offsetting regulatory asset or liability has been recorded.

Investment tax credits have been deferred and are being amortized to income over the average estimated service lives of the related assets.  As of December 31, 2015 and 2014, deferred investment tax credits amounted to $696 and $734, respectively.

The Company filed for a change in accounting method under the IRS TPR when its 2014 income tax return was filed in 2015.  The Company began adjusting its income tax provision for the effects of this change during the fourth quarter of 2014.  Under the change in accounting method, 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 is permitted to make this deduction for prior years (the "catch-up deduction") and each year going forward, beginning with 2014 (the "ongoing deduction").  The ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable.  The catch-up deduction resulted in a decrease in current income taxes payable and an increase to regulatory liabilities.  The Company will seek approval from the PPUC in its next rate filing to amortize the remaining catch-up deduction recorded as a regulatory liability.  Both the ongoing and catch-up deductions resulted in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.

Allowance for Funds Used During Construction

Allowance for funds used during construction (AFUDC) represents the estimated cost of funds used for construction purposes during the period of construction.  These costs are reflected as non-cash income during the construction period and as an addition to the cost of plant constructed. AFUDC includes the net cost of borrowed funds and a rate of return on other funds. The PPUC approved rate of 10.04% was applied for 2014 and 2013.  The Company applied a blended rate in 2015 due to its partial use of tax-exempt financing for 2015 construction projects.  The tax-exempt borrowing rates of 4.00% - 4.50% were applied to those expenditures so financed, whereas the approved 10.04% rate was applied to the remainder of 2015 expenditures.  AFUDC is recovered through water and wastewater rates as utility plant is depreciated.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Impact of Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), which replaces the existing guidance in Accounting Standard Codification 840 – Leases.  This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases.  Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability.  For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense.  This ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years.  The Company is currently assessing the impact of the adoption of the standard on its financial position, results of operations and cash flows.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes.  This ASU requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update.  This ASU is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years.  Early adoption is permitted, and the Company intends to adopt this ASU in the first quarter of 2016.  The Company does not expect the adoption of this standard to have any impact on its results of operations or cash flows, but will result in current deferred income tax asset being presented net with the noncurrent deferred income tax liability on the balance sheets.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs.  This ASU clarifies the required presentation of debt issuance costs.  The standard requires that debt issuance costs be presented on the balance sheet as a direct reduction from the carrying amount of the recognized debt liability, consistent with the treatment of debt discounts.  Amortization of debt issuance costs is to be reported as interest expense.  The recognition and measurement guidance for debt issuance costs are not affected by the standard.  This ASU is effective for fiscal years beginning after December 15, 2015.  Early adoption is permitted.  The Company does not expect the adoption of this standard to have any impact on its results of operations or cash flows, but will result in debt issuance costs being presented as a direct reduction from the carrying amount of debt liabilities on the balance sheets.

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements.  The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements.  Further, an entity must provide certain disclosures if there is substantial doubt about the entity's ability to continue as a going concern.  The ASU is effective for fiscal years ending on or after December 15, 2016 and interim periods thereafter.  The Company will comply with these assessments, but does not expect the adoption of this accounting standard to have any impact on its financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers.  This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605—Revenue Recognition and most industry-specific guidance throughout the Codification.  The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferring the effective date of this amendment for public companies by one year to fiscal years beginning after December 15, 2017.  Early adoption is permitted for fiscal years beginning after December 15, 2016, the original effective date.  The standard permits the use of either a retrospective or cumulative effect transition method.  The Company has not yet selected a transition method and is in the process of assessing the impact of the adoption of the standard on its financial position, results of operations and cash flows.

XML

Acquisitions

12 Months Ended

Dec. 31, 2015

Acquisitions [Abstract]

Acquisitions

2. Acquisitions

On March 7, 2013, the Company completed the acquisition of the Windy Brae Mobile Home Park water assets of Barkas, Inc. in York County, Pennsylvania.  The Company began operating the existing system through an interconnection with its current distribution system on March 11, 2013.  The acquisition resulted in the addition of approximately 135 new water customers with purchase price and acquisition costs of approximately $29, which is less than the depreciated original cost of the assets.  The Company recorded a negative acquisition adjustment of approximately $45 and will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On February 7, 2014, the Company completed the acquisition of the wastewater facilities of East Prospect Borough Authority in York County, Pennsylvania. The Company began operating the existing collection and treatment facilities on February 8, 2014. The acquisition resulted in the addition of approximately 400 wastewater customers with purchase price and acquisition costs of approximately $281, which is less than the depreciated original cost of the assets. The Company recorded a negative acquisition adjustment of approximately $667 as of December 31, 2014.  In 2015, the Company paid additional acquisition costs of approximately $2 resulting in a decrease of the negative acquisition adjustment to $665.  The Company will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On May 30, 2014, the Company completed the acquisition of the water assets of Forest Lakes Water Association in York County, Pennsylvania. The Company began operating the existing system through an interconnection with its current distribution system on June 2, 2014. The acquisition resulted in the addition of approximately 70 new water customers with purchase price and acquisition costs of approximately $18, which is less than the depreciated original cost of the assets. The Company recorded a negative acquisition adjustment of approximately $9 as of December 31, 2014.  In 2015, the Company paid additional acquisition costs of approximately $2 resulting in a decrease of the negative acquisition adjustment to $7.  The Company will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On November 20, 2014, the Company completed the acquisition of the water assets of Lincoln Estates Mobile Home Park in Adams County, Pennsylvania. The Company began operating the existing system as a satellite location on November 24, 2014. The acquisition resulted in the addition of approximately 200 new water customers with purchase price and acquisition costs of approximately $70, which is less than the depreciated original cost of the assets.  In 2015, the Company recorded a negative acquisition adjustment of approximately $77 and will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On April 9, 2015, the Company completed the acquisition of the water assets of The Meadows community in Adams County, Pennsylvania.  The Company began operating the existing system as a satellite location on April 13, 2015.  The acquisition resulted in the addition of approximately 90 new water customers with purchase price and acquisition costs of approximately $63, which is less than the depreciated original cost of the assets.  The Company recorded a negative acquisition adjustment of approximately $159 and will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On April 22, 2015, the Company completed the acquisition of the water assets of the Paradise Homes Community in York County, Pennsylvania.  The Company began operating the existing system through an interconnection with its current distribution system on April 27, 2015.  The acquisition resulted in the addition of approximately 90 new water customers with purchase price and acquisition costs of approximately $36, which is less than the depreciated original cost of the assets.  The Company recorded a negative acquisition adjustment of approximately $28 and will seek approval from the PPUC to amortize the negative acquisition adjustment over the remaining life of the acquired assets.

On October 19, 2015, the Company completed the acquisition of the water assets of the Newberry Farms Mobile Home Park in York County, Pennsylvania.  The Company began operating the existing system through an interconnection with its current distribution system on October 22, 2015.  The acquisition resulted in the addition of approximately 160 new water customers with purchase price and acquisition costs of approximately $116.

On November 2, 2015, the Company completed the acquisition of Margaretta Mobile Home Park in York County, Pennsylvania.  The Company began operating the existing system through an interconnection with its current distribution system on November 3, 2015.  The acquisition resulted in the addition of approximately 65 new water customers with purchase price and acquisition costs of approximately $133.

XML

Income Taxes

12 Months Ended

Dec. 31, 2015

Income Taxes [Abstract]

Income Taxes

3. Income Taxes

The provisions for income taxes consist of:

	2015			2014			2013
Federal current	$	1,873		$	96		$	2,720
State current		597			28			1,153
Federal deferred		2,131			3,757			1,907
State deferred		177			1,035			71
Federal investment tax credit, net of current utilization		(38	)		(39	)		(39	)
Total income taxes	$	4,740		$	4,877		$	5,812

A reconciliation of the statutory Federal tax provision (34%) to the total provision follows:

	2015			2014			2013
Statutory Federal tax provision	$	5,858		$	5,563		$	5,258
State income taxes, net of Federal benefit		511			702			808
IRS TPR ongoing deduction		(1,438	)		(1,342	)		-
Tax-exempt interest		(37	)		(37	)		(34	)
Amortization of investment tax credit		(38	)		(39	)		(39	)
Cash value of life insurance		71			15			(32	)
Domestic production deduction		(190	)		-			(154	)
Other, net		3			15			5
Total income taxes	$	4,740		$	4,877		$	5,812

The Company filed for a change in accounting method under the IRS TPR when its 2014 income tax return was filed in the third quarter of 2015.  The Company began adjusting its income tax provision for the effects of this change during the fourth quarter of 2014.  Under the change in accounting method, 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 was permitted to make this deduction for prior years (the "catch-up deduction") and each year going forward, beginning with 2014 (the "ongoing deduction").  As a result of the catch-up deduction, income tax benefits of $4,314 were deferred as a regulatory liability as of December 31, 2014.  The catch-up deduction resulted in a decrease in current income taxes payable and an increase to regulatory liabilities during 2014.  In 2015, upon final determination of the TPR amounts for its income tax return, the Company reclassified the portion of TPR related to dispositions to deferred taxes and deferred tax liabilities in compliance with the IRS regulations.  The Company will seek approval from the PPUC in its next rate filing to amortize the remaining catch-up deduction of $3,887 recorded as a regulatory liability.  As a result of the ongoing deduction, the net income tax benefits of $1,438 and $1,342 for the years ended December 31, 2015 and 2014, respectively, reduced income tax expense and flowed-through to net income.  The ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable.  Both the ongoing and catch-up deductions result in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.

The tax effects of temporary differences between book and tax balances that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2015 and 2014 are summarized in the following table:

	2015			2014
Deferred tax assets:
Reserve for doubtful accounts	$	128		$	132
Compensated absences		221			209
Deferred compensation		1,465			1,452
Customers' advances and contributions		1			8
Deferred taxes associated with the gross-up of revenues necessary to return, in rates, the effect of temporary differences		122			123
Pensions		3,099			4,185
Tax loss carryover		-			836
Contribution carryover		147			183
Other costs deducted for book, not for tax		51			49
Total deferred tax assets		5,234			7,177
Deferred tax liabilities:
Accelerated depreciation		36,210			34,000
Basis differences from IRS TPR		7,196			5,917
Investment tax credit		413			436
Deferred taxes associated with the gross-up of revenues necessary to recover, in rates, the effect of temporary differences		7,271			6,210
Tax effect of pension regulatory asset		3,986			5,071
Other costs deducted for tax, not for book		438			509
Total deferred tax liabilities		55,514			52,143
Net deferred tax liability	$	50,280		$	44,966
Reflected on balance sheets as:
Current deferred tax asset	$	(215	)	$	(1,058	)
Noncurrent deferred tax liability		50,495			46,024
Net deferred tax liability	$	50,280		$	44,966

The Company has a contribution carryover of $363.  If not used, this carryover will expire in 2019.

No valuation allowance was required for deferred tax assets as of December 31, 2015 and 2014.  In assessing the soundness of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.  Based upon expected future taxable income and the current regulatory environment, management believes it is more likely than not that the Company will realize the benefits of these deductible differences.

The Company determined that there were no uncertain tax positions meeting the recognition and measurement test of the accounting standards recorded in the years that remain open for review by taxing authorities, which are 2012 through 2014 for both federal and state income tax returns.  The Company has not yet filed tax returns for 2015, but has not taken any new position in its 2015 income tax provision.

The Company's policy is to recognize interest and penalties related to income tax matters in other expenses.  There were no interest or penalties for the years ended December 31, 2015, 2014, and 2013.

XML

Long-Term Debt and Short-Term Borrowings

12 Months Ended

Dec. 31, 2015

Long-Term Debt and Short-Term Borrowings [Abstract]

Long-Term Debt and Short-Term Borrowings

4. Long-Term Debt and Short-Term Borrowings

Long-term debt as of December 31, 2015 and 2014 is summarized in the following table:

	2015			2014
4.05% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series A, due 2016	$	-		$	2,350
5.00% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series A, due 2016		-			4,950
10.17% Senior Notes, Series A, due 2019		6,000			6,000
9.60% Senior Notes, Series B, due 2019		5,000			5,000
1.00% Pennvest Loan, due 2019		162			205
10.05% Senior Notes, Series C, due 2020		6,500			6,500
8.43% Senior Notes, Series D, due 2022		7,500			7,500
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series 2008A, due 2029		12,000			12,000
4.75% York County Industrial Development Authority Revenue Bonds, Series 2006, due 2036		10,500			10,500
4.50% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038		14,880			14,880
5.00% Monthly Senior Notes, Series 2010A, due 2040		15,000			15,000
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045		10,000			-
Total long-term debt		87,542			84,885
Less discount on issuance of long-term debt		(237	)		-
Less current maturities		(44	)		(43	)
Long-term portion	$	87,261		$	84,842

Payments due by year:

2016		2017		2018		2019		2020
$	44	$	12,044	$	44	$	11,030	$	6,500

Payments due in 2017 include potential payments of $12,000 on the variable rate bonds (due 2029) which would only be payable if all of the bonds were tendered and could not be remarketed.  There is currently no such indication of this happening.

Fixed Rate Long-Term Debt

On July 23, 2015, the York County Industrial Development Authority (the "YCIDA") issued and sold $10,000 aggregate principal amount of YCIDA Exempt Facilities Revenue Bonds, Series 2015 (the "Series 2015 Bonds") for the Company's benefit pursuant to the terms of a trust indenture, dated as of July 1, 2015, between the YCIDA and Manufacturers and Traders Trust Company, as trustee.  The YCIDA then loaned the proceeds of the sale of the Series 2015 Bonds to the Company pursuant to a loan agreement dated as of July 1, 2015, between the Company and the YCIDA, which matches the debt service requirements on the Bonds.  The Bonds, and therefore the loan, bear interest at rates ranging from 4.00% to 4.50% per annum payable semiannually.  The Bonds have stated maturity dates of June 1 of the years 2029, 2032, 2035, 2038, 2042 and 2045 and are subject to optional and mandatory redemption provisions.  One such provision allows the Company to redeem all or a portion of the bonds on or after June 1, 2025.  Amounts outstanding under the loan agreement are direct, unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting original issue discount and issuance costs, of approximately $9,500.  The net proceeds were used to redeem the PEDFA Series A 2004 Bonds and to fund a portion of the Company's 2015 capital expenditures.

On April 25, 2014, the Pennsylvania Economic Development Financing Authority (the "PEDFA") issued $14,880 aggregate principal amount of PEDFA Exempt Facilities Revenue Refunding Bonds, Series 2014 (the "Series 2014 Bonds") for the Company's benefit pursuant to the terms of a trust indenture, dated as of April 1, 2014, between the PEDFA and Manufacturers and Traders Trust Company, as trustee. The PEDFA then loaned the proceeds of the offering of the Series 2014 Bonds to the Company pursuant to a loan agreement, dated as of April 1, 2014, between the Company and the PEDFA.  The loan bears interest at a rate of 4.50% payable semiannually.  The maturity date of the loan is November 1, 2038.  Amounts outstanding under the loan agreement are direct, unsecured and unsubordinated obligations of the Company.  The proceeds of the loan were used to redeem the 6.00% PEDFA Exempt Facilities Revenue Refunding Bonds, Series 2008B.  The refinancing will reduce interest expense and lower the overall effective debt rate going forward.

The Series 2014 Bonds contain both optional and special redemption provisions. Under the optional provisions, the Company can redeem all or a portion of the bonds on or after May 1, 2019. Under the special provisions, representatives of deceased beneficial owners of the bonds have the right to request redemption prior to the stated maturity of all or part of their interest in the bonds beginning on or after May 1, 2014. The Company is not obligated to redeem any individual interest exceeding $25, or aggregate interest exceeding $300, in any annual period.  To date, no bonds that met the special provisions have been tendered for redemption.

Variable Rate Long-Term Debt

On May 7, 2008, the PEDFA issued $12,000 aggregate principal amount of PEDFA Exempt Facilities Revenue Refunding Bonds, Series A of 2008 (the "Series A Bonds") for the Company's benefit pursuant to the terms of a trust indenture, dated as of May 1, 2008, between the PEDFA and Manufacturers and Traders Trust Company, as trustee.  The PEDFA then loaned the proceeds of the offering of the Series A Bonds to the Company pursuant to a loan agreement, dated as of May 1, 2008, between the Company and the PEDFA.  The loan agreement provides for a $12,000 loan with a maturity date of October 1, 2029.  Amounts outstanding under the loan agreement are the Company's direct general obligations.  The proceeds of the loan were used to redeem the PEDFA Exempt Facilities Revenue Bonds, Series B of 2004 (the "2004 Series B Bonds").  The 2004 Series B Bonds were redeemed because the bonds were tendered and could not be remarketed due to the downgrade of the bond insurer's credit rating.

Borrowings under the loan agreement bear interest at a variable rate as determined by PNC Capital Markets, as remarketing agent, on a periodic basis elected by the Company, which has currently elected that the interest rate be determined on a weekly basis. The remarketing agent determines the interest rate based on the current market conditions in order to determine the lowest interest rate which would cause the Series A Bonds to have a market value equal to the principal amount thereof plus accrued interest thereon.  The variable interest rate under the loan agreement averaged 0.06% in 2015 and 0.07%  in 2014.  As of December 31, 2015 and 2014, the interest rate was 0.02% and 0.05%, respectively.

The holders of the $12,000 Series A Bonds may tender their bonds at any time.  When the bonds are tendered, they are subject to an annual remarketing agreement, pursuant to which a remarketing agent attempts to remarket the tendered bonds according to the terms of the indenture.  In order to keep variable interest rates down and to enhance the marketability of the Series A Bonds, the Company entered into a Reimbursement, Credit and Security Agreement with PNC Bank, National Association ("the Bank") dated as of May 1, 2008.  This agreement provides for a direct pay letter of credit issued by the Bank to the trustee for the Series A Bonds.  The Bank is responsible for providing the trustee with funds for the timely payment of the principal and interest on the Series A Bonds and for the purchase price of the Series A Bonds that have been tendered or deemed tendered for purchase and have not been remarketed.  The Company's responsibility is to reimburse the Bank the same day as regular interest payments are made, and within fourteen months for the purchase price of tendered bonds that have not been remarketed.  The reimbursement period for the principal is immediate at maturity, upon default by the Company, or if the Bank does not renew the Letter of Credit.  The current expiration date of the Letter of Credit is June 30, 2017.  It is reviewed annually for a potential extension of the expiration date.

The Company may elect to have the Series A Bonds redeemed, in whole or in part, on any date that interest is payable for a redemption price equal to the principal amount thereof plus accrued interest to the date of redemption.  The Series A Bonds are also subject to mandatory redemption for the same redemption price in the event that the IRS determines that the interest payable on the Series A Bonds is includable in gross income of the holders of the bonds for federal tax purposes.

Interest Rate Swap Agreement

In connection with the issuance of the PEDFA 2004 Series B Bonds, the Company entered into an interest rate swap agreement with a counterparty, in the notional principal amount of $12,000.  The Company elected to retain the swap agreement for the 2008 Series A Bonds.  Interest rate swap agreements derive their value from underlying interest rates.  These transactions involve both credit and market risk.  The notional amounts are amounts on which calculations, payments, and the value of the derivative are based.  Notional amounts do not represent direct credit exposure.  Direct credit exposure is limited to the net difference between the calculated amounts to be received and paid, if any.  Such difference, which represents the fair value of the swap, is reflected on the Company's balance sheets.  See Note 10 for additional information regarding the fair value of the swap.

The interest rate swap will terminate on the maturity date of the 2008 Series A Bonds (which is the same date as the maturity date of the loan under the loan agreement), unless sooner terminated pursuant to its terms.  In the event the interest rate swap terminates prior to the maturity date of the 2008 Series A Bonds, either the Company or the swap counterparty may be required to make a termination payment to the other based on market conditions at such time.  The Company is exposed to credit-related losses in the event of nonperformance by the counterparty.  The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures, and does not expect the counterparty to default on its obligations.  Notwithstanding the terms of the swap agreement, the Company is ultimately obligated for all amounts due and payable under the loan agreement.

The interest rate swap agreement contains provisions that require the Company to maintain a credit rating of at least BBB- with Standard & Poor's.  On March 20, 2015, Standard & Poor's affirmed the Company's credit rating at A-, with a stable outlook.  If the Company's rating were to fall below this rating, it would be in violation of these provisions, and the counterparty to the derivative could request immediate payment if the derivative was in a liability position.  The Company's interest rate swap was in a liability position as of December 31, 2015.  If a violation was triggered on December 31, 2015, the Company would have been required to pay the counterparty approximately $2,683.

The Company's interest rate swap agreement provides that it pay the counterparty a fixed interest rate of 3.16% on the notional amount of $12,000. In exchange, the counterparty pays the Company a floating interest rate (based on 59% of the U.S. Dollar one-month LIBOR rate) on the notional amount.  The floating interest rate paid to the Company is intended, over the term of the swap, to approximate the variable interest rate on the loan agreement and the interest rate paid to bondholders, thereby managing its exposure to fluctuations in prevailing interest rates.  The Company's net payment rate on the swap averaged 3.06% in 2015 and 3.07% in 2014.

As of December 31, 2015, there was a negative spread of 18 basis points between the variable rate paid to bondholders and the variable rate received from the swap counterparty, which equated to an overall effective rate of 2.98% (including variable interest and swap payments).  As of December 31, 2014, there was a negative spread of 5 basis point which equated to an overall effective rate of 3.11% (including variable interest and swap payments).

Short-Term Borrowings

As of December 31, 2015, the Company maintained unsecured lines of credit aggregating $29,000 with three banks.  The first line of credit, in the amount of $13,000, is a committed line of credit with a revolving 2-year maturity (currently May 2017), and carries an interest rate of LIBOR plus 1.20%.  The second line of credit, in the amount of $11,000, is a committed line of credit, which matures in May 2017 and carries an interest rate of LIBOR plus 1.25%.  This line of credit had a compensating balance requirement of $500 which was eliminated in 2013.  The third line of credit, in the amount of $5,000, is a committed line of credit, which matures in June 2016 and carries an interest rate of LIBOR plus 1.50%.  The Company had no outstanding borrowings under any of its lines of credit as of December 31, 2015 and 2014.

Debt Covenants and Restrictions

The terms of the debt agreements carry certain covenants and limit in some cases the Company's ability to borrow additional funds, to prepay its borrowings and include certain restrictions with respect to declaration and payment of cash dividends and acquisition of the Company's stock.  Under the terms of the most restrictive agreements, the Company cannot borrow in excess of 60% of its utility plant, and cumulative payments for dividends and acquisition of stock since December 31, 1982 may not exceed $1,500 plus net income since that date.  As of December 31, 2015, none of the earnings retained in the business are restricted under these provisions.  The Company's Pennvest Loan is secured by $800 of receivables.  Other than this loan, the Company's debt is unsecured.

The Company's lines of credit require it to maintain a minimum equity to total capitalization ratio (defined as the sum of equity plus funded debt) and a minimum interest coverage ratio (defined as net income plus interest expense plus income tax expense divided by interest expense).  As of December 31, 2015, the Company was in compliance with these covenants.

XML

Common Stock and Earnings Per Share

12 Months Ended

Dec. 31, 2015

Common Stock and Earnings Per Share [Abstract]

Common Stock and Earnings Per Share

5. Common Stock and Earnings Per Share

Earnings per share is based upon the weighted average number of shares outstanding of 12,831,687 in 2015, 12,879,912 in 2014, and 12,928,040 in 2013.  The Company does not have dilutive securities outstanding.

Under the employee stock purchase plan, all full-time employees who have been employed at least ninety consecutive days may purchase shares of the Company's common stock limited to 10% of gross compensation.  The purchase price is 95% of the fair market value (as defined).  Shares issued during 2015, 2014 and 2013 were 7,417, 7,431 and 6,711, respectively.  As of December 31, 2015, 80,711 authorized shares remain unissued under the plan.

The Company has a Dividend Reinvestment and Direct Stock Purchase and Sale Plan, which is available to both current shareholders and the general public.  Certain restrictions apply.  Purchases are made weekly at 100% of the stock's fair market value, as defined in the Prospectus contained in Amendment No. 1 to Securities and Exchange Commission Form S-3, filed by the Company on June 26, 2008.

Under the optional dividend reinvestment portion of the plan, holders of the Company's common stock may purchase additional shares instead of receiving cash dividends.  The purchase price is 95% of the fair market value (as defined).

Shares issued under the 2008 Dividend Reinvestment and Direct Stock Purchase and Sale Plan during 2013 were 112,163.  No shares were issued under this Plan after October 30, 2013.

On October 1, 2013, the Company filed a Registration Statement on Form S-3 with the SEC to authorize 500,000 shares to be issued under the new Prospectus for the Dividend Reinvestment and Direct Stock Purchase and Sale Plan.  Other provisions of the plan were left substantially unchanged.  The Registration Statement was declared effective by the SEC on October 31, 2013.  Shares issued in 2015, 2014 and 2013 under the new Prospectus were 95,451, 126,379 and 36,188, respectively.  As of December 31, 2015, 241,982 authorized shares remain unissued under the plan.

On March 11, 2013, the Board of Directors authorized a share repurchase program granting the Company authority to repurchase up to 1,200,000 shares of the Company's common stock from time to time.  Under the stock repurchase program, the Company may repurchase shares in the open market or through privately negotiated transactions.  The Company may suspend or discontinue the repurchase program at any time.  During 2015, 2014 and 2013, the Company repurchased and retired 121,012, 282,570 and 94,414 shares, respectively.  As of December 31, 2015, 702,004 shares remain available for repurchase.

XML

Employee Benefit Plans

12 Months Ended

Dec. 31, 2015

Employee Benefit Plans [Abstract]

Employee Benefit Plans

6. Employee Benefit Plans

Pensions

The Company maintains a general and administrative and a union-represented defined benefit pension plan covering all of its employees hired prior to May 1, 2010.  Employees hired after May 1, 2010 are eligible for an enhanced 401(k) plan rather than a defined benefit plan.  The benefits under the defined benefit plans are based upon years of service and compensation near retirement.  The Company amended its defined benefit pension plans in 2014, generally limiting the years of eligible service under the plans to 30 years. The Company's funding policy is to contribute annually the amount permitted by the PPUC to be collected from customers in rates, but in no case less than the minimum Employee Retirement Income Security Act (ERISA) required contribution.

The following table sets forth the plans' funded status as of December 31, 2015 and 2014.  The measurement of assets and obligations of the plans is as of December 31, 2015 and 2014.

Obligations and Funded Status At December 31	2015			2014
Change in Benefit Obligation
Pension benefit obligation beginning of year	$	40,884		$	32,054
Service cost		1,166			952
Interest cost		1,515			1,444
Actuarial (gain) loss		(2,873	)		7,762
Plan amendments		-			(210	)
Benefit payments		(1,223	)		(1,118	)
Pension benefit obligation end of year		39,469			40,884
Change in Plan Assets
Fair value of plan assets beginning of year		30,575			27,102
Actual return on plan assets		183			2,409
Employer contributions		2,300			2,182
Benefits paid		(1,223	)		(1,118	)
Fair value of plan assets end of year		31,835			30,575
Funded Status of Plans at End of Year	$	(7,634	)	$	(10,309	)

The accounting standards require that the funded status of defined benefit pension plans be fully recognized on the balance sheets.  They also call for the unrecognized actuarial gain or loss, the unrecognized prior service cost and the unrecognized transition costs to be adjustments to shareholders' equity (accumulated other comprehensive income).  Due to a rate order granted by the PPUC, the Company is permitted under the accounting standards to defer the charges to accumulated other comprehensive income as a regulatory asset.  Management believes these costs will be recovered in future rates charged to customers.  The liability for the funded status of the Company's pension plans is recorded in "Deferred employee benefits" on its balance sheets.

In 2015, the plans recognized an actuarial gain due to the 40 basis point increase in the discount rate and the adoption of an adjusted RP-2014 mortality table and improvement scale which lessened the impact of the RP-2014 mortality table.  In 2014, the actuarial loss grew substantially due to the 85 basis point decline in the discount rate, and a change in mortality tables to the RP-2014 (White Collar and Blue Collar) which increased the life expectancy of plan participants.  The Company uses the corridor method to amortize actuarial gains and losses.  Gains and losses over 10% of the greater of pension benefit obligation or the market value of assets are amortized over the average future service of plan participants expected to receive benefits.

Changes in plan assets and benefit obligations recognized in regulatory assets are as follows:

	2015			2014
Net (gain) loss arising during the period	$	(826	)	$	7,339
Recognized net actuarial loss		(705	)		(126	)
Recognized prior service credit (cost)		13			(197	)
Total changes in regulatory asset during the year	$	(1,518	)	$	7,016

Amounts recognized in regulatory assets that have not yet been recognized as components of net periodic benefit cost consist of the following at December 31:

	2015			2014
Net loss	$	10,447		$	11,978
Prior service (credit) cost		(127	)		(140	)
Regulatory asset	$	10,320		$	11,838

Components of Net Periodic Benefit Cost are as follows:

	2015			2014			2013
Service cost	$	1,166		$	952		$	1,188
Interest cost		1,515			1,444			1,280
Expected return on plan assets		(2,229	)		(1,986	)		(1,644	)
Amortization of loss		705			126			698
Amortization of prior service (credit) cost		(13	)		(13	)		10
Rate-regulated adjustment		1,156			1,659			61
Net periodic benefit cost	$	2,300		$	2,182		$	1,593

The rate-regulated adjustment set forth above is required in order to reflect pension expense for the Company in accordance with the method used in establishing water rates.  The Company is permitted by rate order of the PPUC to expense pension costs to the extent of contributions and defer the remaining expense to regulatory assets to be collected in rates at a later date as additional contributions are made.  During 2015, the deferral decreased $1,156.

The estimated costs for the defined benefit pension plans relating to the December 31, 2015 balance sheet that will be amortized from regulatory assets into net periodic benefit cost over the next fiscal year are as follows:

Net loss	$	554
Net prior service credit		(13	)
		541

The Company plans to contribute $2,300 to the plans in 2016.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid in each of the next five years and the subsequent five years in the aggregate:

2016			2017			2018			2019			2020				2021-2025
	$	1,591		$	1,592		$	1,725		$	1,862		$	1,875	$	10,785

The following tables show the projected benefit obligation, the accumulated benefit obligation and the fair value of plan assets as of December 31:

	2015		2014
Projected benefit obligation	$	39,469	$	40,884
Fair value of plan assets		31,835		30,575

	2015		2014
Accumulated benefit obligation	$	36,302	$	37,500
Fair value of plan assets		31,835		30,575

Weighted-average assumptions used to determine benefit obligations at December 31:

	2015			2014
Discount rate		4.20	%		3.80	%
Rate of compensation increase		2.50% - 3.00	%		3.00	%

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:

	2015			2014			2013
Discount rate		3.80	%		4.65	%		3.75	%
Expected long-term return on plan assets		7.00	%		7.00	%		7.00	%
Rate of compensation increase		3.00	%		3.00	%		3.00	%

The selected long-term rate of return on plan assets was primarily based on the asset allocation of the plan's assets (approximately 50% to 70% equity securities and 30% to 50% fixed income securities).  Analysis of the historic returns of these asset classes and projections of expected future returns were considered in setting the long-term rate of return.

The investment objective of the Company's defined benefit pension plans is that of Growth and Income.  The weighted-average target asset allocations are 50% to 70% equity securities, 30% to 50% fixed income securities, and 0% to 10% reserves (cash and cash equivalents).  Within the equity category, the Company's target allocation is approximately 60-95% large cap, 0-25% mid cap, 0-10% small cap, 0-25% International Developed Nations, and 0-10% International Emerging Nations.  Within the fixed income category, its target allocation is approximately 15-55% U.S. Treasuries, 0–22% Federal Agency securities, 0-40% corporate bonds, 15-55% mortgage-backed securities, 0-20% international, and 0-20% high yield bonds.  The Company's investment performance objectives over a three to five year period are to exceed the annual rate of inflation as measured by the Consumer Price Index by 3%, and to exceed the annualized total return of specified benchmarks applicable to the funds within the asset categories.

Further guidelines within equity securities include: (1) holdings in any one company cannot exceed 5% of the portfolio; (2) a minimum of 20 individual stocks must be included in the domestic stock portfolio; (3) a minimum of 30 individual stocks must be included in the international stock portfolio; (4) equity holdings in any one industry cannot exceed 20-25% of the portfolio; and (5) only U.S.-denominated currency securities are permitted.

Further guidelines for fixed income securities include: (1) fixed income holdings in a single issuer are limited to 5% of the portfolio; (2) acceptable investments include money market securities, U.S. Government and its agencies and sponsored entities' securities, mortgage-backed and asset-backed securities, corporate securities and mutual funds offering high yield bond portfolios; (3) purchases must be limited to investment grade or higher; (4) non-U.S. dollar denominated securities are not permissible; and (5) high risk derivatives are prohibited.

The fair values of the Company's pension plan assets at December 31, 2015 and 2014 by asset category and fair value hierarchy level are as follows.  The majority of the valuations are based on quoted prices on active markets (Level 1), with the remaining valuations based on broker/dealer quotes, active market makers, models, and yield curves (Level 2).

	Total Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)
Asset Category	2015		2014		2015		2014		2015		2014
Cash and Money Market Funds (a)	$	1,205	$	1,064	$	1,205	$	1,064	$	-	$	-
Equity Securities:
Common Equity Securities (b)		2,686		3,031		2,686		3,031		-		-
Equity Mutual Funds (c)		18,017		16,380		18,017		16,380		-		-
Fixed Income Securities:
U.S. Treasury Obligations		833		831		-		-		833		831
Corporate and Foreign Bonds (d)		3,427		1,620		-		-		3,427		1,620
Fixed Income Mutual Funds (e)		5,667		7,649		5,667		7,649		-		-
Total Plan Assets	$	31,835	$	30,575	$	27,575	$	28,124	$	4,260	$	2,451

(a) The portfolios are designed to keep approximately three months of distributions in immediately available funds.  The Company was more heavily-weighted in cash as of December 31, 2015 due to market volatility.

(b) This category includes investments in U.S. common stocks and foreign stocks trading in the U.S. widely distributed among consumer discretionary, consumer staples, healthcare, information technology, financial services, materials, industrials and  energy. The individual stocks are primarily large cap stocks which track with the S&P 500 with the exception of $447 in 2014 which was invested in York Water Company common stock.  In 2015, the Company repurchased the company stock previously held in the pension portfolio.

(c) This category currently includes a majority of investments in closed-end mutual funds as well as domestic equity mutual funds and international mutual funds which give the portfolio exposure to mid and large cap index funds as well as international diversified index funds.

(d) This category currently includes only U.S. corporate bonds and notes widely distributed among consumer discretionary, consumer staples, healthcare, information technology and financial services.

(e) This category includes fixed income investments in mutual funds which include government, corporate and mortgage securities of both the U.S. and other countries.  The mortgage-backed securities and non-U.S. corporate and sovereign investments add further diversity to the fixed income portion of the portfolio.

Defined Contribution Plan

The Company has a savings plan pursuant to the provisions of section 401(k) of the Internal Revenue Code.  For employees hired before May 1, 2010, this plan provides for elective employee contributions of up to 15% of compensation and Company matching contributions of 100% of the participant's contribution, up to a maximum annual Company contribution of $2.8 for each employee.

Employees hired after May 1, 2010 are entitled to an enhanced feature of the plan.  This feature provides for elective employee contributions of up to 15% of compensation and Company matching contributions of 100% of the participant's contribution, up to a maximum of 4% of the employee's compensation.  In addition, the Company will make an annual contribution of $1.2 to each employee's account whether or not they defer their own compensation.  Employees eligible for this enhanced 401(k) plan feature are not eligible for the defined benefit plans.  As of December 31, 2015, nineteen employees were participating in the enhanced feature of the plan.  The Company's contributions to both portions of the plan amounted to $262 in 2015, $239 in 2014, and $222 in 2013.

Deferred Compensation

The Company has non-qualified deferred compensation and supplemental retirement agreements with certain members of management. The future commitments under these arrangements are offset by corporate-owned life insurance policies.  At December 31, 2015 and 2014, the present value of the future obligations was approximately $3,608 and $3,576, respectively.  The insurance policies included in other assets had a total cash value of approximately $3,378 and $3,567 at December 31, 2015 and 2014, respectively.  The Company's net (income) expenses under the plans amounted to $380 in 2015, $658 in 2014 and $(91) in 2013.

Other

The Company has a retiree life insurance program which pays the beneficiary of a retiree $2 upon the retiree's death.  At December 31, 2015 and 2014, the present value of the future obligations was approximately $98 and $110, respectively.  There is no trust or insurance covering this future liability, instead the Company will pay these benefits out of its general assets.  The Company's net (income) expenses under the plan amounted to $(4) in 2015, $25 in 2014 and $(14) in 2013.

XML

Rate Matters

12 Months Ended

Dec. 31, 2015

Rate Matters [Abstract]

Rate Matters

7. Rate Matters

From time to time, the Company files applications for rate increases with the PPUC and is granted rate relief as a result of such requests.  The most recent rate request was filed by the Company on May 29, 2013 and sought an increase in rates designed to produce additional annual water revenues of $7,116 and additional annual wastewater revenues of $28.  Effective February 28, 2014, the PPUC authorized an increase in water rates designed to produce approximately $4,972 in additional annual revenues, and an increase in wastewater rates for the Asbury Pointe subdivision to produce approximately $28 in additional annual revenues.

The PPUC permits water utilities to collect a distribution system improvement charge (DSIC).  The DSIC allows the Company to add a charge to customers' bills for qualified replacement costs of certain infrastructure without submitting a rate filing.  This surcharge mechanism typically adjusts periodically based on additional qualified capital expenditures completed or anticipated in a future period.  The DSIC is capped at 5% of base rates, and is reset to zero when new base rates that reflect the costs of those additions become effective or when a utility's earnings exceed a regulatory benchmark.  The surcharge reset to zero when the new base rates took effect on February 28, 2014.  In 2015, the Company's earnings exceeded the regulatory benchmark, preventing the collection of a DSIC.  The DSIC provided revenues in 2015, 2014 and 2013 of $0, $283 and $1,445, respectively.  The DSIC is subject to audit by the PPUC.

XML

Notes Receivable and Customers' Advances for Construction

12 Months Ended

Dec. 31, 2015

Notes Receivable and Customers' Advances for Construction [Abstract]

Notes Receivable and Customers' Advances for Construction

8. Notes Receivable and Customers' Advances for Construction

The Company entered agreements with three municipalities to extend water service into previously formed water districts.  The Company loaned funds to the municipalities to cover the costs related to the projects.  The municipalities concurrently advanced these funds back to the Company in the form of customers' advances for construction.  The municipalities are required by enacted ordinances to charge application fees and water revenue surcharges (fees) to customers connected to the system, which are remitted to the Company.  The note principal and the related customer advance are reduced periodically as operating revenues are earned by the Company from customers connected to the system and refunds of advances are made.  There is no due date for the notes or expiration date for the advances.  Two of the notes receivable were fully repaid in 2015.

The Company has recorded interest income of $110 in 2015, $107 in 2014 and $101 in 2013.  The interest rate on the note outstanding at December 31, 2015 is 7.5%.

Included in the accompanying balance sheets at December 31, 2015 and 2014 were the following amounts related to these projects.

	2015		2014
Notes receivable, including interest	$	255	$	266
Customers' advances for construction		310		626

The Company has other customers' advances for construction totaling $7,190 and $10,086 at December 31, 2015 and 2014, respectively.

XML

Commitments

12 Months Ended

Dec. 31, 2015

Commitments [Abstract]

Commitments

9. Commitments

Based on its capital budget, the Company anticipates construction and acquisition expenditures for 2016 and 2017 of approximately $20,100 and $13,100, respectively, exclusive of any acquisitions not yet approved.  The Company plans to finance ongoing capital expenditures with internally-generated funds, borrowings against the Company's lines of credit, proceeds from the issuance of common stock under its dividend reinvestment and direct stock purchase and sale plan and ESPP, potential common stock or debt issues and customer advances.

As of December 31, 2015, the Company employed 107 full time people, including 37 under union contract.  The current contract was ratified in March 2014 and expires on April 30, 2017.

The Company is involved in certain legal and administrative proceedings before various courts and governmental agencies concerning water service and other matters.  The Company expects that the ultimate disposition of these proceedings will not have a material effect on the Company's financial position, results of operations and cash flows.

XML

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2015

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

10. Fair Value of Financial Instruments

The accounting standards regarding fair value measurements establish a fair value hierarchy which indicates the extent to which inputs used in measuring fair value are observable in the market.  Level 1 inputs include quoted prices for identical instruments and are the most observable.  Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, commodity rates and yield curves.  Level 3 inputs are not observable in the market and include management's own judgments about the assumptions market participants would use in pricing the asset or liability.

The Company has recorded its interest rate swap liability at fair value in accordance with the standards.  The liability is recorded under the caption "Other deferred credits" on the balance sheets.  The table below illustrates the fair value of the interest rate swap as of the end of the reporting period.

Description	December 31, 2015	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,511	$2,511

Fair values are measured as the present value of all expected future cash flows based on the LIBOR-based swap yield curve as of the date of the valuation.  These inputs to this calculation are deemed to be Level 2 inputs.  The balance sheet carrying value reflects the Company's credit quality as of December 31, 2015.  The rate used in discounting all prospective cash flows anticipated to be made under this swap reflects a representation of the yield to maturity for 30-year debt on utilities rated A- as of December 31, 2015.  The use of the Company's credit quality resulted in a reduction in the swap liability of $172.  The fair value of the swap reflecting the Company's credit quality as of December 31, 2014 is shown in the table below.

Description	December 31, 2014	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,592	$2,592

The carrying amount of current assets and liabilities that are considered financial instruments approximates fair value as of the dates presented.  The Company's long-term debt (including current maturities and excluding the discount on issuance of long-term debt), with a carrying value of $87,542 at December 31, 2015, and $84,885 at December 31, 2014, had an estimated fair value of approximately $102,000 and $100,000 at December 31, 2015 and 2014, respectively.  The estimated fair value of debt was calculated using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration and risk profile.  These inputs to this calculation are deemed to be Level 2 inputs.  The Company recognized its credit rating in determining the yield curve, and did not factor in third party credit enhancements including bond insurance on the 2006 York County Industrial Development Authority issue and the letter of credit on the 2008 PEDFA Series A issue.

Customers' advances for construction and notes receivable have carrying values at December 31, 2015 of $7,500 and $255, respectively.  At December 31, 2014, customers' advances for construction and notes receivable had carrying values of $10,712 and $266, respectively.  The relative fair values of these amounts cannot be accurately estimated since the timing of future payment streams is dependent upon several factors, including new customer connections, customer consumption levels and future rate increases.

XML

Taxes Other than Income Taxes

12 Months Ended

Dec. 31, 2015

Taxes Other than Income Taxes [Abstract]

Taxes Other than Income Taxes

11. Taxes Other than Income Taxes

The following table provides the components of taxes other than income taxes:

	2015		2014		2013
Regulatory Assessment	$	242	$	218	$	220
Property		334		339		364
Payroll, net of amounts capitalized		510		494		462
Capital Stock		42		59		75
Other		1		1		1
Total taxes other than income taxes	$	1,129	$	1,111	$	1,122

XML

Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2015

Selected Quarterly Financial Data (Unaudited) [Abstract]

Selected Quarterly Financial Data (Unaudited)

12. Selected Quarterly Financial Data (Unaudited)

	First		Second		Third		Fourth		Year
2015
Operating revenues	$	11,209	$	11,895	$	12,368	$	11,617	$	47,089
Operating income		5,134		5,682		6,353		5,492		22,661
Net income		2,528		2,925		3,520		3,516		12,489
Basic earnings per share		0.20		0.22		0.28		0.27		0.97
Dividends declared per share		0.1495		0.1495		0.1495		0.1555		0.6040
2014
Operating revenues	$	10,571	$	11,768	$	12,062	$	11,499	$	45,900
Operating income		4,758		5,800		6,092		5,427		22,077
Net income *		2,111		2,757		3,065		3,551		11,484
Basic earnings per share		0.16		0.22		0.23		0.28		0.89
Dividends declared per share		0.1431		0.1431		0.1431		0.1495		0.5788
* Fourth quarter net income includes a tax benefit of $1,342 for the full year 2014 due to the implementation of the IRS TPR.

XML

Schedule II Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2015

Schedule II Valuation and Qualifying Accounts [Abstract]

Schedule II Valuation and Qualifying Accounts

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

FOR THE THREE YEARS ENDED DECEMBER 31, 2015

			Additions
Description	Balance at Beginning of Year		Charged to Cost and Expenses		Recoveries		Deductions		Balance at End of Year
FOR THE YEAR ENDED DECEMBER 31, 2015
Reserve for uncollectible accounts	$	325,000	$	292,248	$	40,681	$	342,929	$	315,000
FOR THE YEAR ENDED DECEMBER 31, 2014
Reserve for uncollectible accounts	$	320,000	$	322,499	$	44,071	$	361,570	$	325,000
FOR THE YEAR ENDED DECEMBER 31, 2013
Reserve for uncollectible accounts	$	305,000	$	290,886	$	36,369	$	312,255	$	320,000

The Deductions column above represents write-offs of accounts receivable during the applicable year.

XML

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2015

Significant Accounting Policies [Abstract]

Nature of Operations

The primary business of The York Water Company is to impound, purify and distribute water.  The Company also operates two wastewater collection and treatment systems.  The Company operates within its franchised territory located in York and Adams Counties, Pennsylvania, and is subject to regulation by the Pennsylvania Public Utility Commission, or PPUC.

Utility Plant and Depreciation

Utility Plant and Depreciation

The cost of additions includes contracted cost, direct labor and fringe benefits, materials, overhead and, for certain utility plant, allowance for funds used during construction.  In accordance with regulatory accounting requirements, water and wastewater systems acquired are recorded at estimated original cost of utility plant when first devoted to utility service and the applicable depreciation is recorded to accumulated depreciation.  The difference between the estimated original cost less applicable accumulated depreciation, and the purchase price and acquisition costs is recorded as an acquisition adjustment within utility plant as permitted by the PPUC.  At December 31, 2015 and 2014, utility plant includes a net credit acquisition adjustment of $3,724 and $3,522, respectively.  For those amounts approved by the PPUC, the net acquisition adjustment is being amortized over the remaining life of the respective assets. Certain amounts are still awaiting approval from the PPUC before amortization will commence.  Amortization amounted to $58 in 2015, $54 in 2014, and $50 in 2013.

Upon normal retirement of depreciable property, the estimated or actual cost of the asset is credited to the utility plant account, and such amounts, together with the cost of removal less salvage value, are charged to the reserve for depreciation.  To the extent the Company recovers cost of removal or other retirement costs through rates after the retirement costs are incurred, a regulatory asset is reported.  Gains or losses from abnormal retirements are reflected in income currently.

The straight-line remaining life method is used to compute depreciation on utility plant cost, exclusive of land and land rights.  Annual provisions for depreciation of transportation and mechanical equipment included in utility plant are computed on a straight-line basis over the estimated service lives.  Such provisions are charged to clearing accounts and apportioned therefrom to operating expenses and other accounts in accordance with the Uniform System of Accounts as prescribed by the PPUC.

The Company charges to maintenance expense the cost of repairs and replacements and renewals of minor items of property.  Maintenance of transportation equipment is charged to clearing accounts and apportioned therefrom in a manner similar to depreciation.  The cost of replacements, renewals and betterments of units of property is capitalized to the utility plant accounts.

The following remaining lives are used for financial reporting purposes:

	December 31,				Approximate range
Utility Plant Asset Category	2015		2014		of remaining lives
Mains and accessories	$	170,991	$	164,627	10 – 83 years
Services, meters and hydrants		66,267		63,479	19 – 55 years
Operations structures, reservoirs and water tanks		44,739		43,654	12 – 38 years
Pumping and treatment equipment		27,664		25,616	3 – 34 years
Office, transportation and operating equipment		11,725		11,216	3 – 21 years
Land and other non-depreciable assets		3,172		3,166		-
Utility plant in service		324,558		311,758
Construction work in progress		4,857		4,767		-
Total Utility Plant	$	329,415	$	316,525

The effective rate of depreciation was 2.24% in 2015, 2.26% in 2014, and 2.28% in 2013 on average utility plant, net of customers' advances and contributions. Larger depreciation provisions resulting from allowable accelerated methods are deducted for tax purposes.

Cash and Cash Equivalents

Cash and Cash Equivalents

For the purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents except for those instruments earmarked to fund construction expenditures or repay long-term debt.

The Company periodically maintains cash balances in major financial institutions in excess of the federally insured limit by the Federal Deposit Insurance Corporation (FDIC).  The Company has not experienced any losses and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Restricted Cash

Restricted Cash

The Company served as the custodian for an escrow account that was used to rehabilitate a neighborhood within the service territory of the Company.  The deposits made by various community organizations were classified as restricted cash on the balance sheets of the Company.  The project was completed and the remaining cash was disbursed in 2015.

In 2012, the Company had a compensating balance requirement for one of its lines of credit which was recorded as Restricted Cash – compensating balance.  This requirement was removed in 2013.

Accounts Receivable

Accounts Receivable

Accounts receivable are stated at outstanding balances, less a reserve for doubtful accounts.  The reserve for doubtful accounts is established through provisions charged against income.  Accounts deemed to be uncollectible are charged against the reserve and subsequent recoveries, if any, are credited to the reserve.  The reserve for doubtful accounts is maintained at a level considered adequate to provide for losses that can be reasonably anticipated.  Management's periodic evaluation of the adequacy of the reserve is 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.  This evaluation is inherently subjective.  Unpaid balances remaining after the stated payment terms are considered past due.

Revenue Recognition

Revenue Recognition

Operating revenues include amounts billed to water customers on a cycle basis and unbilled amounts based on actual and estimated usage from the latest meter reading to the end of the accounting period.  Operating revenues also include amounts billed to wastewater customers as either a flat monthly fee or a metered rate based on water consumption.  The metered wastewater revenue includes actual and estimated usage from the latest meter reading to the end of the accounting period.

Materials and Supplies Inventories

Materials and Supplies Inventories

Materials and supplies inventories are stated at cost.  Costs are determined using the average cost method.

Deferred Debt Expense

Deferred Debt Expense

Deferred debt expense is amortized on a straight-line basis over the term of the related debt.

Notes Receivable

Notes Receivable

Notes receivable are recorded at cost and represent amounts due from various municipalities for construction of water mains in their particular municipality.  Management, considering current information and events regarding the borrowers' ability to repay their obligations, considers a note to be impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the note agreement.  When a note is considered to be impaired, the carrying value of the note is written down.  The amount of the impairment is measured based on the present value of expected future cash flows discounted at the note's effective interest rate.

Regulatory Assets and Liabilities

Regulatory Assets and Liabilities

The Company is subject to the provisions of generally accepted accounting principles regarding rate-regulated entities.  The accounting standards provide for the recognition of regulatory assets and liabilities as allowed by regulators for costs or credits that are reflected in current customer rates or are considered probable of being included in future rates.  The regulatory assets or liabilities are then relieved as the cost or credit is reflected in rates.  Regulatory assets represent costs that are expected to be fully recovered from customers in future rates while regulatory liabilities represent amounts that are expected to be refunded to customers in future rates.  These deferred costs have been excluded from the Company's rate base and, therefore, no return is being earned on the unamortized balances.

Regulatory assets and liabilities are comprised of the following:

	December 31,				Remaining Recovery
	2015		2014		Periods
Assets
Income taxes	$	18,389	$	15,800	Various
Postretirement benefits		9,819		12,493	5 – 10 years
Unrealized swap losses		2,481		2,561	1 – 14 years
Utility plant retirement costs		2,247		1,561	5 years
Service life study expenses		3		5	2 years
Rate case filing expenses		57		194	1 years
		32,996		32,614
Liabilities
IRS TPR catch-up deduction		3,887		4,314	Not yet known
Income taxes		776		806	1 – 50 years
	$	4,663	$	5,120

The regulatory asset for income taxes include (a) deferred state income taxes related primarily to differences between book and tax depreciation expense, (b) deferred income taxes related to the differences that arise between specific asset improvement costs capitalized for book purposes and deducted as a repair expense for tax purposes, and (c) deferred income taxes associated with the gross-up of revenues related to the differences.  These assets are recognized for ratemaking purposes on a cash or flow-through basis and will be recovered in rates as they reverse.

Postretirement benefits include the difference between contributions and deferred pension expense and the underfunded status of the pension plans.  The underfunded status represents the difference between the projected benefit obligation and the fair market value of the assets.  This asset is expected to be recovered in future years as additional contributions are made or market conditions improve.  The recovery period is dependent on contributions made to the plans, plan asset performance and the discount rate used to value the obligations.  The period is estimated at between 5 and 10 years.

The Company uses regulatory accounting treatment to defer the mark-to-market unrealized gains and losses on its interest rate swap to reflect that the gain or loss is included in the ratemaking formula when the transaction actually settles.  The value of the swap as of the balance sheet date is recorded as part of other deferred credits.  Realized gains or losses on the swap will be recorded as interest expense in the statement of income over its remaining life of 14 years.

Utility plant retirement costs, including cost of removal, represents costs already incurred which are expected to be recovered over a five-year period in rates, through depreciation expense.  Service life study and rate case filing expenses are deferred and amortized over their remaining lives of two and one years, respectively.

The regulatory liability for the Internal Revenue Service, or IRS, tangible property regulations, or TPR, catch-up deduction represents the tax benefits realized on the Company's 2014 income tax return for qualifying capital expenditures made prior to 2014.  In 2015, upon final determination of the TPR amounts for its income tax return, the Company reclassified the portion of TPR related to dispositions to deferred taxes and deferred tax liabilities in compliance with the IRS regulations.  The Company will seek approval from the PPUC in its next rate filing to amortize the remaining catch-up deduction.

The regulatory liability for income taxes relates mainly to deferred investment tax credits, and additionally to deferred taxes related to postretirement death benefits and bad debts.  These liabilities will be given back to customers in rates as tax deductions occur over the next 1-50 years.

Regulatory liabilities are part of other accrued expenses and other deferred credits on the balance sheets.

Other Assets

Other Assets

Other assets consist mainly of the cash value of life insurance policies held as an investment by the Company for reimbursement of costs and benefits associated with its supplemental retirement and deferred compensation programs.

Customers' Advances for Construction

Customers' Advances for Construction

Customer advances are cash payments from developers, municipalities, customers or builders for construction of utility plant, and are refundable upon completion of construction, as operating revenues are earned.  If the Company loans funds for construction to the customer, the refund amount is credited to the note receivable rather than paid out in cash.  After all refunds to which the customer is entitled are made, any remaining balance is transferred to contributions in aid of construction.  From 1986 to 1996 when customer advances were taxable income to the Company, additional funds were collected from customers to cover the taxes.  Those funds were recorded as a liability within Customer Advances for Construction and are being amortized as deferred income over the tax life of the underlying assets.

Contributions in Aid of Construction

Contributions in Aid of Construction

Contributions in Aid of Construction is composed of (i) direct, non-refundable contributions from developers, customers or builders for construction of water infrastructure and (ii) customer advances that have become non-refundable.  Contributions in aid of construction are deducted from the Company's rate base, and therefore, no return is earned on property financed with contributions.  The PPUC requires that contributions received remain on the Company's balance sheets indefinitely as a long-term liability.

Interest Rate Swap Agreement

Interest Rate Swap Agreement

The Company is exposed to certain risks relating to its ongoing business operations.  The primary risk managed by using derivative instruments is interest rate risk.  The Company utilizes an interest rate swap agreement to convert its variable-rate debt to a fixed rate.  Interest rate swaps are contracts in which a series of interest rate cash flows are exchanged over a prescribed period.  The notional amount on which the interest payments are based is not exchanged.  The Company has designated the interest rate swap agreement as a cash flow hedge, classified as a financial derivative used for non-trading activities.

The accounting standards regarding accounting for derivatives and hedging activities require companies to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheets.  In accordance with the standards, the interest rate swap is recorded on the balance sheets in other deferred credits at fair value.

The Company uses regulatory accounting treatment rather than hedge accounting to defer the unrealized gains and losses on its interest rate swap.  Instead of the effective portion being recorded as other comprehensive income and the ineffective portion being recognized in earnings, the entire unrealized swap value is recorded as a regulatory asset.  Based on current ratemaking treatment, the Company expects the gains and losses to be recognized in rates and in interest expense as the swap settlements occur.  Swap settlements are recorded in the income statement with the hedged item as interest expense.  Swap settlements resulted in the reclassification from regulatory assets to interest expense of $366 in 2015, $368 in 2014, and $366 in 2013.  The overall swap result was a (gain) loss of $285 in 2015, $1,318 in 2014, and $(830) in 2013.  During the twelve months ending December 31, 2016, the Company expects to reclassify $328 (before tax) from regulatory assets to interest expense.

The interest rate swap will expire on October 1, 2029.

Income Taxes

Income Taxes

Certain income and expense items are accounted for in different time periods for financial reporting than for income tax reporting purposes.

Deferred income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  To the extent such income taxes increase or decrease future rates, an offsetting regulatory asset or liability has been recorded.

Investment tax credits have been deferred and are being amortized to income over the average estimated service lives of the related assets.  As of December 31, 2015 and 2014, deferred investment tax credits amounted to $696 and $734, respectively.

The Company filed for a change in accounting method under the IRS TPR when its 2014 income tax return was filed in 2015.  The Company began adjusting its income tax provision for the effects of this change during the fourth quarter of 2014.  Under the change in accounting method, 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 is permitted to make this deduction for prior years (the "catch-up deduction") and each year going forward, beginning with 2014 (the "ongoing deduction").  The ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable.  The catch-up deduction resulted in a decrease in current income taxes payable and an increase to regulatory liabilities.  The Company will seek approval from the PPUC in its next rate filing to amortize the remaining catch-up deduction recorded as a regulatory liability.  Both the ongoing and catch-up deductions resulted in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.

Allowance for Funds Used During Construction

Allowance for Funds Used During Construction

Allowance for funds used during construction (AFUDC) represents the estimated cost of funds used for construction purposes during the period of construction.  These costs are reflected as non-cash income during the construction period and as an addition to the cost of plant constructed. AFUDC includes the net cost of borrowed funds and a rate of return on other funds. The PPUC approved rate of 10.04% was applied for 2014 and 2013.  The Company applied a blended rate in 2015 due to its partial use of tax-exempt financing for 2015 construction projects.  The tax-exempt borrowing rates of 4.00% - 4.50% were applied to those expenditures so financed, whereas the approved 10.04% rate was applied to the remainder of 2015 expenditures.  AFUDC is recovered through water and wastewater rates as utility plant is depreciated.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Impact of Recent Accounting Pronouncements

Impact of Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), which replaces the existing guidance in Accounting Standard Codification 840 – Leases.  This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases.  Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability.  For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense.  This ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years.  The Company is currently assessing the impact of the adoption of the standard on its financial position, results of operations and cash flows.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes.  This ASU requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.  The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update.  This ASU is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years.  Early adoption is permitted, and the Company intends to adopt this ASU in the first quarter of 2016.  The Company does not expect the adoption of this standard to have any impact on its results of operations or cash flows, but will result in current deferred income tax asset being presented net with the noncurrent deferred income tax liability on the balance sheets.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs.  This ASU clarifies the required presentation of debt issuance costs.  The standard requires that debt issuance costs be presented on the balance sheet as a direct reduction from the carrying amount of the recognized debt liability, consistent with the treatment of debt discounts.  Amortization of debt issuance costs is to be reported as interest expense.  The recognition and measurement guidance for debt issuance costs are not affected by the standard.  This ASU is effective for fiscal years beginning after December 15, 2015.  Early adoption is permitted.  The Company does not expect the adoption of this standard to have any impact on its results of operations or cash flows, but will result in debt issuance costs being presented as a direct reduction from the carrying amount of debt liabilities on the balance sheets.

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements.  The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements.  Further, an entity must provide certain disclosures if there is substantial doubt about the entity's ability to continue as a going concern.  The ASU is effective for fiscal years ending on or after December 15, 2016 and interim periods thereafter.  The Company will comply with these assessments, but does not expect the adoption of this accounting standard to have any impact on its financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers.  This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605—Revenue Recognition and most industry-specific guidance throughout the Codification.  The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferring the effective date of this amendment for public companies by one year to fiscal years beginning after December 15, 2017.  Early adoption is permitted for fiscal years beginning after December 15, 2016, the original effective date.  The standard permits the use of either a retrospective or cumulative effect transition method.  The Company has not yet selected a transition method and is in the process of assessing the impact of the adoption of the standard on its financial position, results of operations and cash flows.

XML

Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2015

Significant Accounting Policies [Abstract]

Utility Plant

The following remaining lives are used for financial reporting purposes:

	December 31,				Approximate range
Utility Plant Asset Category	2015		2014		of remaining lives
Mains and accessories	$	170,991	$	164,627	10 – 83 years
Services, meters and hydrants		66,267		63,479	19 – 55 years
Operations structures, reservoirs and water tanks		44,739		43,654	12 – 38 years
Pumping and treatment equipment		27,664		25,616	3 – 34 years
Office, transportation and operating equipment		11,725		11,216	3 – 21 years
Land and other non-depreciable assets		3,172		3,166		-
Utility plant in service		324,558		311,758
Construction work in progress		4,857		4,767		-
Total Utility Plant	$	329,415	$	316,525

Regulatory Assets and Liabilities

Regulatory assets and liabilities are comprised of the following:

	December 31,				Remaining Recovery
	2015		2014		Periods
Assets
Income taxes	$	18,389	$	15,800	Various
Postretirement benefits		9,819		12,493	5 – 10 years
Unrealized swap losses		2,481		2,561	1 – 14 years
Utility plant retirement costs		2,247		1,561	5 years
Service life study expenses		3		5	2 years
Rate case filing expenses		57		194	1 years
		32,996		32,614
Liabilities
IRS TPR catch-up deduction		3,887		4,314	Not yet known
Income taxes		776		806	1 – 50 years
	$	4,663	$	5,120

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income Taxes [Abstract]

Provisions for Income Taxes

The provisions for income taxes consist of:

	2015			2014			2013
Federal current	$	1,873		$	96		$	2,720
State current		597			28			1,153
Federal deferred		2,131			3,757			1,907
State deferred		177			1,035			71
Federal investment tax credit, net of current utilization		(38	)		(39	)		(39	)
Total income taxes	$	4,740		$	4,877		$	5,812

Reconciliation of Statutory Federal Tax Provision to Total Provision

A reconciliation of the statutory Federal tax provision (34%) to the total provision follows:

	2015			2014			2013
Statutory Federal tax provision	$	5,858		$	5,563		$	5,258
State income taxes, net of Federal benefit		511			702			808
IRS TPR ongoing deduction		(1,438	)		(1,342	)		-
Tax-exempt interest		(37	)		(37	)		(34	)
Amortization of investment tax credit		(38	)		(39	)		(39	)
Cash value of life insurance		71			15			(32	)
Domestic production deduction		(190	)		-			(154	)
Other, net		3			15			5
Total income taxes	$	4,740		$	4,877		$	5,812

Deferred Tax Assets and Liabilities

The tax effects of temporary differences between book and tax balances that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2015 and 2014 are summarized in the following table:

	2015			2014
Deferred tax assets:
Reserve for doubtful accounts	$	128		$	132
Compensated absences		221			209
Deferred compensation		1,465			1,452
Customers' advances and contributions		1			8
Deferred taxes associated with the gross-up of revenues necessary to return, in rates, the effect of temporary differences		122			123
Pensions		3,099			4,185
Tax loss carryover		-			836
Contribution carryover		147			183
Other costs deducted for book, not for tax		51			49
Total deferred tax assets		5,234			7,177
Deferred tax liabilities:
Accelerated depreciation		36,210			34,000
Basis differences from IRS TPR		7,196			5,917
Investment tax credit		413			436
Deferred taxes associated with the gross-up of revenues necessary to recover, in rates, the effect of temporary differences		7,271			6,210
Tax effect of pension regulatory asset		3,986			5,071
Other costs deducted for tax, not for book		438			509
Total deferred tax liabilities		55,514			52,143
Net deferred tax liability	$	50,280		$	44,966
Reflected on balance sheets as:
Current deferred tax asset	$	(215	)	$	(1,058	)
Noncurrent deferred tax liability		50,495			46,024
Net deferred tax liability	$	50,280		$	44,966

XML

Long-Term Debt and Short-Term Borrowings (Tables)

12 Months Ended

Dec. 31, 2015

Long-Term Debt and Short-Term Borrowings [Abstract]

Long-Term Debt

Long-term debt as of December 31, 2015 and 2014 is summarized in the following table:

	2015			2014
4.05% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series A, due 2016	$	-		$	2,350
5.00% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series A, due 2016		-			4,950
10.17% Senior Notes, Series A, due 2019		6,000			6,000
9.60% Senior Notes, Series B, due 2019		5,000			5,000
1.00% Pennvest Loan, due 2019		162			205
10.05% Senior Notes, Series C, due 2020		6,500			6,500
8.43% Senior Notes, Series D, due 2022		7,500			7,500
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series 2008A, due 2029		12,000			12,000
4.75% York County Industrial Development Authority Revenue Bonds, Series 2006, due 2036		10,500			10,500
4.50% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038		14,880			14,880
5.00% Monthly Senior Notes, Series 2010A, due 2040		15,000			15,000
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045		10,000			-
Total long-term debt		87,542			84,885
Less discount on issuance of long-term debt		(237	)		-
Less current maturities		(44	)		(43	)
Long-term portion	$	87,261		$	84,842

Payments Due by Year

Payments due by year:

2016		2017		2018		2019		2020
$	44	$	12,044	$	44	$	11,030	$	6,500

XML

Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2015

Employee Benefit Plans [Abstract]

Obligations and Funded Status

The following table sets forth the plans' funded status as of December 31, 2015 and 2014.  The measurement of assets and obligations of the plans is as of December 31, 2015 and 2014.

Obligations and Funded Status At December 31	2015			2014
Change in Benefit Obligation
Pension benefit obligation beginning of year	$	40,884		$	32,054
Service cost		1,166			952
Interest cost		1,515			1,444
Actuarial (gain) loss		(2,873	)		7,762
Plan amendments		-			(210	)
Benefit payments		(1,223	)		(1,118	)
Pension benefit obligation end of year		39,469			40,884
Change in Plan Assets
Fair value of plan assets beginning of year		30,575			27,102
Actual return on plan assets		183			2,409
Employer contributions		2,300			2,182
Benefits paid		(1,223	)		(1,118	)
Fair value of plan assets end of year		31,835			30,575
Funded Status of Plans at End of Year	$	(7,634	)	$	(10,309	)

Changes in Plan Assets and Benefit Obligations Recognized in Regulatory Assets

Changes in plan assets and benefit obligations recognized in regulatory assets are as follows:

	2015			2014
Net (gain) loss arising during the period	$	(826	)	$	7,339
Recognized net actuarial loss		(705	)		(126	)
Recognized prior service credit (cost)		13			(197	)
Total changes in regulatory asset during the year	$	(1,518	)	$	7,016

Amounts Recognized in Regulatory Assets That Have Not Yet Been Recognized as Components of Net Periodic Benefit Cost

Amounts recognized in regulatory assets that have not yet been recognized as components of net periodic benefit cost consist of the following at December 31:

	2015			2014
Net loss	$	10,447		$	11,978
Prior service (credit) cost		(127	)		(140	)
Regulatory asset	$	10,320		$	11,838

Components of Net Periodic Benefit Cost

Components of Net Periodic Benefit Cost are as follows:

	2015			2014			2013
Service cost	$	1,166		$	952		$	1,188
Interest cost		1,515			1,444			1,280
Expected return on plan assets		(2,229	)		(1,986	)		(1,644	)
Amortization of loss		705			126			698
Amortization of prior service (credit) cost		(13	)		(13	)		10
Rate-regulated adjustment		1,156			1,659			61
Net periodic benefit cost	$	2,300		$	2,182		$	1,593

Regulatory Assets to be Reclassified into Net Periodic Benefit Cost Over Next Fiscal Year

The estimated costs for the defined benefit pension plans relating to the December 31, 2015 balance sheet that will be amortized from regulatory assets into net periodic benefit cost over the next fiscal year are as follows:

Net loss	$	554
Net prior service credit		(13	)
		541

The Company plans to contribute $2,300 to the plans in 2016.

Benefit Payments Expected to be Paid

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid in each of the next five years and the subsequent five years in the aggregate:

2016			2017			2018			2019			2020				2021-2025
	$	1,591		$	1,592		$	1,725		$	1,862		$	1,875	$	10,785

Projected Benefit Obligation and Fair Value of Plan Assets

The following tables show the projected benefit obligation, the accumulated benefit obligation and the fair value of plan assets as of December 31:

	2015		2014
Projected benefit obligation	$	39,469	$	40,884
Fair value of plan assets		31,835		30,575

Accumulated Benefit Obligation and Fair Value of Plan Assets

	2015		2014
Accumulated benefit obligation	$	36,302	$	37,500
Fair value of plan assets		31,835		30,575

Weighted-Average Assumptions Used to Determine Benefit Obligations and Net Periodic Benefit Cost

Weighted-average assumptions used to determine benefit obligations at December 31:

	2015			2014
Discount rate		4.20	%		3.80	%
Rate of compensation increase		2.50% - 3.00	%		3.00	%

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:

	2015			2014			2013
Discount rate		3.80	%		4.65	%		3.75	%
Expected long-term return on plan assets		7.00	%		7.00	%		7.00	%
Rate of compensation increase		3.00	%		3.00	%		3.00	%

Fair Values of Pension Plan Assets

The fair values of the Company's pension plan assets at December 31, 2015 and 2014 by asset category and fair value hierarchy level are as follows.  The majority of the valuations are based on quoted prices on active markets (Level 1), with the remaining valuations based on broker/dealer quotes, active market makers, models, and yield curves (Level 2).

	Total Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)
Asset Category	2015		2014		2015		2014		2015		2014
Cash and Money Market Funds (a)	$	1,205	$	1,064	$	1,205	$	1,064	$	-	$	-
Equity Securities:
Common Equity Securities (b)		2,686		3,031		2,686		3,031		-		-
Equity Mutual Funds (c)		18,017		16,380		18,017		16,380		-		-
Fixed Income Securities:
U.S. Treasury Obligations		833		831		-		-		833		831
Corporate and Foreign Bonds (d)		3,427		1,620		-		-		3,427		1,620
Fixed Income Mutual Funds (e)		5,667		7,649		5,667		7,649		-		-
Total Plan Assets	$	31,835	$	30,575	$	27,575	$	28,124	$	4,260	$	2,451

(a) The portfolios are designed to keep approximately three months of distributions in immediately available funds.  The Company was more heavily-weighted in cash as of December 31, 2015 due to market volatility.

(b) This category includes investments in U.S. common stocks and foreign stocks trading in the U.S. widely distributed among consumer discretionary, consumer staples, healthcare, information technology, financial services, materials, industrials and  energy. The individual stocks are primarily large cap stocks which track with the S&P 500 with the exception of $447 in 2014 which was invested in York Water Company common stock.  In 2015, the Company repurchased the company stock previously held in the pension portfolio.

(c) This category currently includes a majority of investments in closed-end mutual funds as well as domestic equity mutual funds and international mutual funds which give the portfolio exposure to mid and large cap index funds as well as international diversified index funds.

(d) This category currently includes only U.S. corporate bonds and notes widely distributed among consumer discretionary, consumer staples, healthcare, information technology and financial services.

(e) This category includes fixed income investments in mutual funds which include government, corporate and mortgage securities of both the U.S. and other countries.  The mortgage-backed securities and non-U.S. corporate and sovereign investments add further diversity to the fixed income portion of the portfolio.

XML

Notes Receivable and Customers' Advances for Construction (Tables)

12 Months Ended

Dec. 31, 2015

Notes Receivable and Customers' Advances for Construction [Abstract]

Amounts Related to Water District Projects

Included in the accompanying balance sheets at December 31, 2015 and 2014 were the following amounts related to these projects.

	2015		2014
Notes receivable, including interest	$	255	$	266
Customers' advances for construction		310		626

XML

Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2015

Fair Value of Financial Instruments [Abstract]

Fair Value of Interest Rate Swap

The Company has recorded its interest rate swap liability at fair value in accordance with the standards.  The liability is recorded under the caption "Other deferred credits" on the balance sheets.  The table below illustrates the fair value of the interest rate swap as of the end of the reporting period.

Description	December 31, 2015	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,511	$2,511

Fair values are measured as the present value of all expected future cash flows based on the LIBOR-based swap yield curve as of the date of the valuation.  These inputs to this calculation are deemed to be Level 2 inputs.  The balance sheet carrying value reflects the Company's credit quality as of December 31, 2015.  The rate used in discounting all prospective cash flows anticipated to be made under this swap reflects a representation of the yield to maturity for 30-year debt on utilities rated A- as of December 31, 2015.  The use of the Company's credit quality resulted in a reduction in the swap liability of $172.  The fair value of the swap reflecting the Company's credit quality as of December 31, 2014 is shown in the table below.

Description	December 31, 2014	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,592	$2,592

XML

Taxes Other than Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Taxes Other than Income Taxes [Abstract]

Components of Taxes Other than Income Taxes

The following table provides the components of taxes other than income taxes:

	2015		2014		2013
Regulatory Assessment	$	242	$	218	$	220
Property		334		339		364
Payroll, net of amounts capitalized		510		494		462
Capital Stock		42		59		75
Other		1		1		1
Total taxes other than income taxes	$	1,129	$	1,111	$	1,122

XML

Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2015

Selected Quarterly Financial Data (Unaudited) [Abstract]

Selected Quarterly Financial Data

	First		Second		Third		Fourth		Year
2015
Operating revenues	$	11,209	$	11,895	$	12,368	$	11,617	$	47,089
Operating income		5,134		5,682		6,353		5,492		22,661
Net income		2,528		2,925		3,520		3,516		12,489
Basic earnings per share		0.20		0.22		0.28		0.27		0.97
Dividends declared per share		0.1495		0.1495		0.1495		0.1555		0.6040
2014
Operating revenues	$	10,571	$	11,768	$	12,062	$	11,499	$	45,900
Operating income		4,758		5,800		6,092		5,427		22,077
Net income *		2,111		2,757		3,065		3,551		11,484
Basic earnings per share		0.16		0.22		0.23		0.28		0.89
Dividends declared per share		0.1431		0.1431		0.1431		0.1495		0.5788
* Fourth quarter net income includes a tax benefit of $1,342 for the full year 2014 due to the implementation of the IRS TPR.

XML

Significant Accounting Policies (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) System	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Significant Accounting Policies [Abstract]
Number of wastewater collection and treatment systems operated | System	2
Utility Plant and Depreciation [Abstract]
Utility plant acquisition adjustments	$ 3,724	$ 3,522
Amortization of utility plant acquisition adjustments	58	54	$ 50
Utility Plant	$ 329,415	$ 316,525
Effective rate of depreciation	2.24%	2.26%	2.28%
Regulatory Assets [Abstract]
Regulatory assets	$ 32,996	$ 32,614
Regulatory Liabilities [Abstract]
Regulatory liabilities	4,663	5,120
Interest Rate Swap Agreement [Abstract]
Interest rate swap settlements reclassified to interest expense	366	368	$ 366
Interest rate swap (gain) loss capitalized	285	1,318	$ (830)
Interest rate swap settlements to be reclassified during the next 12 months	$ 328
Interest rate swap expire period	Oct. 01, 2029
Income Taxes [Abstract]
Deferred investment tax credits	$ 696	$ 734
Allowance for Funds Used During Construction [Abstract]
PPUC approved rate for AFUDC	10.04%	10.04%	10.04%
Minimum [Member]
Allowance for Funds Used During Construction [Abstract]
Allowance for tax-exempt funds rate used during construction	4.00%
Maximum [Member]
Allowance for Funds Used During Construction [Abstract]
Allowance for tax-exempt funds rate used during construction	4.50%
IRS TPR Catch-Up Deduction [Member]
Regulatory Liabilities [Abstract]
Regulatory liabilities	$ 3,887	$ 4,314
Income Taxes [Member]
Regulatory Liabilities [Abstract]
Regulatory liabilities	$ 776	806
Income Taxes [Member] | Minimum [Member]
Regulatory Liabilities [Abstract]
Remaining recovery periods	1 year
Income Taxes [Member] | Maximum [Member]
Regulatory Liabilities [Abstract]
Remaining recovery periods	50 years
Income Taxes [Member]
Regulatory Assets [Abstract]
Regulatory assets	$ 18,389	15,800
Postretirement Benefits [Member]
Regulatory Assets [Abstract]
Regulatory assets	$ 9,819	12,493
Postretirement Benefits [Member] | Minimum [Member]
Regulatory Assets [Abstract]
Remaining recovery periods	5 years
Postretirement Benefits [Member] | Maximum [Member]
Regulatory Assets [Abstract]
Remaining recovery periods	10 years
Unrealized Swap Losses [Member]
Regulatory Assets [Abstract]
Regulatory assets	$ 2,481	2,561
Unrealized Swap Losses [Member] | Minimum [Member]
Regulatory Assets [Abstract]
Remaining recovery periods	1 year
Unrealized Swap Losses [Member] | Maximum [Member]
Regulatory Assets [Abstract]
Remaining recovery periods	14 years
Utility Plant Retirement Costs [Member]
Regulatory Assets [Abstract]
Regulatory assets	$ 2,247	1,561
Remaining recovery periods	5 years
Service Life Study Expenses [Member]
Regulatory Assets [Abstract]
Regulatory assets	$ 3	5
Remaining recovery periods	2 years
Rate Case Filing Expenses [Member]
Regulatory Assets [Abstract]
Regulatory assets	$ 57	194
Remaining recovery periods	1 year
Mains and Accessories [Member]
Utility Plant and Depreciation [Abstract]
Utility Plant	$ 170,991	164,627
Mains and Accessories [Member] | Minimum [Member]
Utility Plant and Depreciation [Abstract]
Approximate range of remaining lives	10 years
Mains and Accessories [Member] | Maximum [Member]
Utility Plant and Depreciation [Abstract]
Approximate range of remaining lives	83 years
Services, meters and hydrants [Member]
Utility Plant and Depreciation [Abstract]
Utility Plant	$ 66,267	63,479
Services, meters and hydrants [Member] | Minimum [Member]
Utility Plant and Depreciation [Abstract]
Approximate range of remaining lives	19 years
Services, meters and hydrants [Member] | Maximum [Member]
Utility Plant and Depreciation [Abstract]
Approximate range of remaining lives	55 years
Operations structures, reservoirs and water tanks [Member]
Utility Plant and Depreciation [Abstract]
Utility Plant	$ 44,739	43,654
Operations structures, reservoirs and water tanks [Member] | Minimum [Member]
Utility Plant and Depreciation [Abstract]
Approximate range of remaining lives	12 years
Operations structures, reservoirs and water tanks [Member] | Maximum [Member]
Utility Plant and Depreciation [Abstract]
Approximate range of remaining lives	38 years
Pumping and Treatment Equipment [Member]
Utility Plant and Depreciation [Abstract]
Utility Plant	$ 27,664	25,616
Pumping and Treatment Equipment [Member] | Minimum [Member]
Utility Plant and Depreciation [Abstract]
Approximate range of remaining lives	3 years
Pumping and Treatment Equipment [Member] | Maximum [Member]
Utility Plant and Depreciation [Abstract]
Approximate range of remaining lives	34 years
Office, transportation and operating equipment [Member]
Utility Plant and Depreciation [Abstract]
Utility Plant	$ 11,725	11,216
Office, transportation and operating equipment [Member] | Minimum [Member]
Utility Plant and Depreciation [Abstract]
Approximate range of remaining lives	3 years
Office, transportation and operating equipment [Member] | Maximum [Member]
Utility Plant and Depreciation [Abstract]
Approximate range of remaining lives	21 years
Land and other non-depreciable assets [Member]
Utility Plant and Depreciation [Abstract]
Utility Plant	$ 3,172	3,166
Approximate range of remaining lives	0 years
Utility plant in service [Member]
Utility Plant and Depreciation [Abstract]
Utility Plant	$ 324,558	311,758
Construction work in progress [Member]
Utility Plant and Depreciation [Abstract]
Utility Plant	$ 4,857	$ 4,767
Approximate range of remaining lives	0 years

XML

Acquisitions (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) Customer	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Acquisitions [Abstract]
Purchase price	$ 352	$ 369	$ 28
Windy Brae Mobile Home Park [Member]
Acquisitions [Abstract]
Date of agreement	Mar. 07, 2013
Effective date of acquisition	Mar. 11, 2013
Number of customers acquired | Customer	135
Purchase price	$ 29
Acquisition adjustment	$ 45
Wastewater Facilities of East Prospect Borough Authority [Member]
Acquisitions [Abstract]
Date of agreement	Feb. 07, 2014
Effective date of acquisition	Feb. 08, 2014
Number of customers acquired | Customer	400
Purchase price	$ 281
Change in acquisition adjustment	2
Acquisition adjustment	$ 665	667
Water Assets of Forest Lakes Water Association [Member]
Acquisitions [Abstract]
Date of agreement	May 30, 2014
Effective date of acquisition	Jun. 02, 2014
Number of customers acquired | Customer	70
Purchase price	$ 18
Change in acquisition adjustment	2
Acquisition adjustment	$ 7	$ 9
Water Assets of Lincoln Estates Mobile Home Park [Member]
Acquisitions [Abstract]
Date of agreement	Nov. 20, 2014
Effective date of acquisition	Nov. 24, 2014
Number of customers acquired | Customer	200
Purchase price	$ 70
Acquisition adjustment	$ 77
Water Assets of The Meadows [Member]
Acquisitions [Abstract]
Date of agreement	Apr. 09, 2015
Effective date of acquisition	Apr. 13, 2015
Number of customers acquired | Customer	90
Purchase price	$ 63
Acquisition adjustment	$ 159
Water Assets of Paradise Homes Community [Member]
Acquisitions [Abstract]
Date of agreement	Apr. 22, 2015
Effective date of acquisition	Apr. 27, 2015
Number of customers acquired | Customer	90
Purchase price	$ 36
Acquisition adjustment	$ 28
Water Assets of Newberry Farms Mobile Home Park [Member]
Acquisitions [Abstract]
Date of agreement	Oct. 19, 2015
Effective date of acquisition	Oct. 22, 2015
Number of customers acquired | Customer	160
Purchase price	$ 116
Water Assets of Margaretta Mobile Home Park [Member]
Acquisitions [Abstract]
Date of agreement	Nov. 02, 2015
Effective date of acquisition	Nov. 03, 2015
Number of customers acquired | Customer	65
Purchase price	$ 133

XML

Income Taxes (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) Position	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Provisions for Income Taxes [Abstract]
Federal current	$ 1,873	$ 96	$ 2,720
State current	597	28	1,153
Federal deferred	2,131	3,757	1,907
State deferred	177	1,035	71
Federal investment tax credit, net of current utilization	(38)	(39)	(39)
Total income taxes	$ 4,740	$ 4,877	$ 5,812
Reconciliation of Statutory Federal Tax Provision to Total Provision [Abstract]
Statutory Federal tax percentage	34.00%	34.00%	34.00%
Statutory Federal tax provision	$ 5,858	$ 5,563	$ 5,258
State income taxes, net of Federal benefit	511	702	808
IRS TPR ongoing deduction	(1,438)	(1,342)	0
Tax-exempt interest	(37)	(37)	(34)
Amortization of investment tax credit	(38)	(39)	(39)
Cash value of life insurance	71	15	(32)
Domestic production deduction	(190)	0	(154)
Other, net	3	15	5
Total income taxes	4,740	4,877	5,812
Regulatory Liabilities [Abstract]
Regulatory liabilities	4,663	5,120
Deferred Tax Assets [Abstract]
Reserve for doubtful accounts	128	132
Compensated absences	221	209
Deferred compensation	1,465	1,452
Customers' advances and contributions	1	8
Deferred taxes associated with the gross-up of revenues necessary to return, in rates, the effect of temporary differences	122	123
Pensions	3,099	4,185
Tax loss carryover	0	836
Contribution carryover	147	183
Other costs deducted for book, not for tax	51	49
Total deferred tax assets	5,234	7,177
Deferred Tax Liabilities [Abstract]
Accelerated depreciation	36,210	34,000
Basis differences from IRS TPR	7,196	5,917
Investment tax credit	413	436
Deferred taxes associated with the gross-up of revenues necessary to recover, in rates, the effect of temporary differences	7,271	6,210
Tax effect of pension regulatory asset	3,986	5,071
Other costs deducted for tax, not for book	438	509
Total deferred tax liabilities	55,514	52,143
Net deferred tax liability	50,280	44,966
Reflected on Balance Sheets as [Abstract]
Current deferred tax asset	(215)	(1,058)
Noncurrent deferred tax liability	50,495	46,024
Net deferred tax liability	50,280	44,966
Other Income Tax Disclosures [Abstract]
Contribution carryovers	$ 363
Contribution carryovers, expiration date	Dec. 31, 2019
Uncertain tax positions	$ 0
Number of new tax positions taken | Position	0
Interest or penalties	$ 0	0	$ 0
Maximum [Member]
Other Income Tax Disclosures [Abstract]
Open tax year	2014
Minimum [Member]
Other Income Tax Disclosures [Abstract]
Open tax year	2012
Valuation Allowance of Deferred Tax Assets [Member]
Other Income Tax Disclosures [Abstract]
Valuation allowance	$ 0	0
IRS TPR Catch-Up Deduction [Member]
Regulatory Liabilities [Abstract]
Regulatory liabilities	$ 3,887	$ 4,314

XML

Long-Term Debt and Short-Term Borrowings (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) Bank	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Long-term Debt [Abstract]
Long-term debt	$ 87,542	$ 84,885
Less discount on issuance of long-term debt	(237)	0
Less current maturities	(44)	(43)
Long-term portion	87,261	84,842
Payments Due by Year [Abstract]
2016	44
2017	12,044
2018	44
2019	11,030
2020	6,500
Line of Credit Facility [Abstract]
Unsecured lines of credit aggregating amount	$ 29,000
Number of banks in which unsecured line of credit maintained | Bank	3
Debt Covenants and Restrictions [Abstract]
Maximum borrowing percentage of utility plant	60.00%
Base amount added to annual net income to determine restriction on dividends and stock acquisition	$ 1,500
Unsecured Line of Credit, First Note [Member]
Line of Credit Facility [Abstract]
Unsecured lines of credit aggregating amount	$ 13,000
Line of credit, maturity period	2 years
Line of credit, maturity date	May 01, 2017
Line of credit amount outstanding	$ 0	0
Unsecured Line of Credit, First Note [Member] | LIBOR [Member]
Line of Credit Facility [Abstract]
Basis for interest rate	1.20%
Unsecured Line of Credit, Second Note [Member]
Line of Credit Facility [Abstract]
Unsecured lines of credit aggregating amount	$ 11,000
Line of credit, maturity date	May 01, 2017
Line of credit compensating balance requirement	$ 0	0	$ 500
Line of credit amount outstanding	$ 0	0
Unsecured Line of Credit, Second Note [Member] | LIBOR [Member]
Line of Credit Facility [Abstract]
Basis for interest rate	1.25%
Unsecured Line of Credit, Third Note [Member]
Line of Credit Facility [Abstract]
Unsecured lines of credit aggregating amount	$ 5,000
Line of credit, maturity date	Jun. 01, 2016
Line of credit amount outstanding	$ 0	0
Unsecured Line of Credit, Third Note [Member] | LIBOR [Member]
Line of Credit Facility [Abstract]
Basis for interest rate	1.50%
Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series A, due 2016, 4.05 Percent [Member]
Long-term Debt [Abstract]
Long-term debt	$ 0	2,350
Interest rate	4.05%
Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series A, due 2016, 5.00 Percent [Member
Long-term Debt [Abstract]
Long-term debt	$ 0	4,950
Interest rate	5.00%
Senior Notes, Series A, due 2019, 10.17 percent [Member]
Long-term Debt [Abstract]
Long-term debt	$ 6,000	6,000
Interest rate	10.17%
Senior Notes, Series B, due 2019, 9.6 percent [Member]
Long-term Debt [Abstract]
Long-term debt	$ 5,000	5,000
Interest rate	9.60%
Pennvest Loan, due 2019, 1.00 percent [Member]
Long-term Debt [Abstract]
Long-term debt	$ 162	205
Interest rate	1.00%
Debt Covenants and Restrictions [Abstract]
Amount of receivables pledged as collateral	$ 800
Senior Notes, Series C, due 2020, 10.05 percent [Member]
Long-term Debt [Abstract]
Long-term debt	$ 6,500	6,500
Interest rate	10.05%
Senior Notes, Series D, due 2022, 8.43 percent [Member]
Long-term Debt [Abstract]
Long-term debt	$ 7,500	7,500
Interest rate	8.43%
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds Series 2008A due 2029 [Member]
Long-term Debt [Abstract]
Long-term debt	$ 12,000	$ 12,000
Payments Due by Year [Abstract]
2017	12,000
Long-Term Debt [Abstract]
Face value	$ 12,000
Variable interest rate, annual average	0.06%	0.07%
Variable interest rate, at year end	0.02%	0.05%
Period in which to reimburse bank for purchase price of tendered bonds that have not been remarketed	14 months
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds Series 2008A due 2029 [Member] | Interest Rate Swap [Member]
Interest Rate Swap Agreement [Abstract]
Notional amount of swap	$ 12,000
Potential payment to counterparty	$ 2,683
Fixed interest rate	3.16%
Net payment rate on swap	3.06%	3.07%
Interest rate spread in basis points	(0.18%)	(0.05%)
Overall effective rate, including variable interest and swap payments	2.98%	3.11%
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds Series 2008A due 2029 [Member] | LIBOR [Member] | Interest Rate Swap [Member]
Interest Rate Swap Agreement [Abstract]
Percentage of variable interest rate	59.00%
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds Series 2008A due 2029 [Member] | Letter of Credit [Member]
Line of Credit Facility [Abstract]
Line of credit, maturity date	Jun. 30, 2017
Industrial Development Authority Revenue Bonds, series 2006, due 2036, 4.75 percent [Member]
Long-term Debt [Abstract]
Long-term debt	$ 10,500	$ 10,500
Interest rate	4.75%
4.50% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038 [Member]
Long-term Debt [Abstract]
Long-term debt	$ 14,880	14,880
Interest rate	4.50%
Long-Term Debt [Abstract]
Special provision, amount to be redeemed per individual interest, per year, maximum	$ 25
Special provision, amount to be redeemed in the aggregate, per year, maximum	300
Special provision, repayment of bonds	0
Face value	14,880
Monthly Senior Notes, Series 2010A, due 2040, 5.00 percent [Member]
Long-term Debt [Abstract]
Long-term debt	$ 15,000	15,000
Interest rate	5.00%
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045 [Member]
Long-term Debt [Abstract]
Long-term debt	$ 10,000	$ 0
Long-Term Debt [Abstract]
Proceeds from debt, net of issuance costs	9,500
Face value	$ 10,000
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045 [Member] | Maximum [Member]
Long-term Debt [Abstract]
Interest rate	4.50%
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045 [Member] | Minimum [Member]
Long-term Debt [Abstract]
Interest rate	4.00%
Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Bonds, Series 2008B, due 2038, 6.00 percent [Member]
Long-term Debt [Abstract]
Interest rate		6.00%

XML

Common Stock and Earnings Per Share (Details) - shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Common Stock and Earnings Per Share [Abstract]
Weighted average number of shares outstanding (in shares)	12,831,687	12,879,912	12,928,040
Common Stock [Abstract]
Number of shares authorized to be repurchased under the stock repurchase program (in shares)	1,200,000
Number of shares repurchased and retired under the stock repurchase program (in shares)	121,012	282,570	94,414
Number of remaining shares authorized to be repurchased under the stock repurchase program (in shares)	702,004
Employee Stock Purchase Plan [Member]
Common Stock [Abstract]
Minimum service period required to purchase shares	90 days
Maximum gross compensation allocated to purchase shares	10.00%
Percentage of purchase price of fair market value	95.00%
Shares issued during period (in shares)	7,417	7,431	6,711
Number of authorized shares remains unissued (in shares)	80,711
Direct Stock Purchase and Sale Portion of Plan [Member]
Common Stock [Abstract]
Percentage of purchase price of fair market value	100.00%
Optional Dividend Reinvestment Portion of Plan [Member]
Common Stock [Abstract]
Percentage of purchase price of fair market value	95.00%
2008 Dividend Reinvestment and Direct Stock Purchase and Sale Plan [Member]
Common Stock [Abstract]
Shares issued during period (in shares)	0	0	112,163
2013 Dividend Reinvestment and Direct Stock Purchase Plan [Member]
Common Stock [Abstract]
Shares authorized under registration statement (in shares)	500,000
Shares issued during period (in shares)	95,451	126,379	36,188
Number of authorized shares remains unissued (in shares)	241,982

XML

Employee Benefit Plans, Changes in Benefit Obligation and Plan Assets (Details) - Defined Benefit Pension Plans Combined [Member] - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Employee Benefit Plans [Abstract]
Maximum period of eligible service		30 years
Change in discount rate		0.40%	(0.85%)
Threshold for amortization of gains and losses		10.00%
Estimated employer contributions		$ 2,300
Change in Benefit Obligation [Abstract]
Pension benefit obligation beginning of year		40,884	$ 32,054
Service cost		1,166	952	$ 1,188
Interest cost		1,515	1,444	1,280
Actuarial (gain) loss		(2,873)	7,762
Plan amendments		0	(210)
Benefit payments		(1,223)	(1,118)
Pension benefit obligation end of year		39,469	40,884	32,054
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year		30,575	27,102
Actual return on plan assets		183	2,409
Employer contributions		2,300	2,182
Benefits paid		(1,223)	(1,118)
Fair value of plan assets end of year		31,835	30,575	27,102
Funded Status of Plans at End of Year		(7,634)	(10,309)
Changes in Plan Assets and Benefit Obligations Recognized in Regulatory Assets [Abstract]
Net (gain) loss arising during the period		(826)	7,339
Recognized net actuarial loss		(705)	(126)	(698)
Recognized prior service credit (cost)		13	(197)
Total changes in regulatory asset during the year		(1,518)	7,016
Amounts Recognized in Regulatory Assets that Have Not Yet Been Recognized as Components of Net Periodic Benefit Cost [Abstract]
Net loss		10,447	11,978
Prior service (credit) cost		(127)	(140)
Regulatory asset		10,320	11,838
Components of Net Periodic Benefit Cost [Abstract]
Service cost		1,166	952	1,188
Interest cost		1,515	1,444	1,280
Expected return on plan assets		(2,229)	(1,986)	(1,644)
Amortization of loss		705	126	698
Amortization of prior service (credit) cost		(13)	(13)	10
Rate-regulated adjustment		1,156	1,659	61
Net periodic benefit cost		2,300	2,182	$ 1,593
Change in defined benefit plan regulatory asset from pension contribution greater (less) than net periodic benefit cost		1,156
Cash and Money Market Funds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[1]	1,064
Fair value of plan assets end of year	[1]	1,205	1,064
Common Equity Securities [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[2]	3,031
Fair value of plan assets end of year	[2]	2,686	3,031
Equity Mutual Funds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[3]	16,380
Fair value of plan assets end of year	[3]	18,017	16,380
U.S. Treasury Obligations [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year		831
Fair value of plan assets end of year		833	831
Corporate and Foreign Bonds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[4]	1,620
Fair value of plan assets end of year	[4]	3,427	1,620
Fixed Income Mutual Funds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[5]	7,649
Fair value of plan assets end of year	[5]	5,667	7,649
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year		28,124
Fair value of plan assets end of year		27,575	28,124
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Cash and Money Market Funds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[1]	1,064
Fair value of plan assets end of year	[1]	1,205	1,064
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Common Equity Securities [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[2]	3,031
Fair value of plan assets end of year	[2]	2,686	3,031
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Equity Mutual Funds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[3]	16,380
Fair value of plan assets end of year	[3]	18,017	16,380
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury Obligations [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year		0
Fair value of plan assets end of year		0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate and Foreign Bonds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[4]	0
Fair value of plan assets end of year	[4]	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fixed Income Mutual Funds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[5]	7,649
Fair value of plan assets end of year	[5]	5,667	7,649
Significant Other Observable Inputs (Level 2) [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year		2,451
Fair value of plan assets end of year		4,260	2,451
Significant Other Observable Inputs (Level 2) [Member] | Cash and Money Market Funds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[1]	0
Fair value of plan assets end of year	[1]	0	0
Significant Other Observable Inputs (Level 2) [Member] | Common Equity Securities [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[2]	0
Fair value of plan assets end of year	[2]	0	0
Significant Other Observable Inputs (Level 2) [Member] | Equity Mutual Funds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[3]	0
Fair value of plan assets end of year	[3]	0	0
Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury Obligations [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year		831
Fair value of plan assets end of year		833	831
Significant Other Observable Inputs (Level 2) [Member] | Corporate and Foreign Bonds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[4]	1,620
Fair value of plan assets end of year	[4]	3,427	1,620
Significant Other Observable Inputs (Level 2) [Member] | Fixed Income Mutual Funds [Member]
Change in Plan Assets [Abstract]
Fair value of plan assets beginning of year	[5]	0
Fair value of plan assets end of year	[5]	$ 0	$ 0

[1] The portfolios are designed to keep approximately three months of distributions in immediately available funds. The Company was more heavily-weighted in cash as of December 31, 2015 due to market volatility.

[2] This category includes investments in U.S. common stocks and foreign stocks trading in the U.S. widely distributed among consumer discretionary, consumer staples, healthcare, information technology, financial services, materials, industrials and energy. The individual stocks are primarily large cap stocks which track with the S&P 500 with the exception of $447 in 2014 which was invested in York Water Company common stock. In 2015, the Company repurchased the company stock previously held in the pension portfolio.

[3] This category currently includes a majority of investments in closed-end mutual funds as well as domestic equity mutual funds and international mutual funds which give the portfolio exposure to mid and large cap index funds as well as international diversified index funds.

[4] This category currently includes only U.S. corporate bonds and notes widely distributed among consumer discretionary, consumer staples, healthcare, information technology and financial services.

[5] This category includes fixed income investments in mutual funds which include government, corporate and mortgage securities of both the U.S. and other countries. The mortgage-backed securities and non-U.S. corporate and sovereign investments add further diversity to the fixed income portion of the portfolio.

XML

Employee Benefit Plans, Regulatory Assets through Assumptions (Details) - Defined Benefit Pension Plans Combined [Member] $ in Thousands		12 Months Ended
		Dec. 31, 2015 USD ($) Stock	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Regulatory Assets to be Reclassified into Net Periodic Benefit Cost over Next Fiscal Year [Abstract]
Net loss		$ 554
Net prior service credit		(13)
Regulatory assets to be reclassified into net periodic benefit cost during the next 12 months		541
Benefit Payments Expected to be Paid for Future Services [Abstract]
2016		1,591
2017		1,592
2018		1,725
2019		1,862
2020		1,875
2021-2025		10,785
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Projected benefit obligation		39,469	$ 40,884	$ 32,054
Fair value of plan assets		31,835	30,575	27,102
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Accumulated benefit obligation		36,302	37,500
Fair value of plan assets		$ 31,835	$ 30,575	$ 27,102
Weighted-Average Assumptions Used to Determine Benefit Obligations [Abstract]
Discount rate		4.20%	3.80%
Rate of compensation increase			3.00%
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost [Abstract]
Discount rate		3.80%	4.65%	3.75%
Expected long-term return on plan assets		7.00%	7.00%	7.00%
Rate of compensation increase		3.00%	3.00%	3.00%
Target Asset Allocations [Abstract]
Percentage by which the return on plan assets should exceed the annual rate of inflation		3.00%
Maximum equity securities holdings in any one company		5.00%
Minimum number of individual stocks that must be included in the domestic stock portfolio | Stock		20
Minimum number of individual stocks that must be included in the international stock portfolio | Stock		30
Maximum fixed income securities holdings in any single issuer		5.00%
Cash and Money Market Funds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[1]	$ 1,205	$ 1,064
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[1]	1,205	1,064
Common Equity Securities [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[2]	2,686	3,031
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[2]	2,686	3,031
Equity Mutual Funds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[3]	18,017	16,380
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[3]	18,017	16,380
U.S. Treasury Obligations [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets		833	831
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets		833	831
Corporate and Foreign Bonds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[4]	3,427	1,620
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[4]	3,427	1,620
Fixed Income Mutual Funds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[5]	5,667	7,649
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[5]	$ 5,667	7,649
Minimum [Member]
Weighted-Average Assumptions Used to Determine Benefit Obligations [Abstract]
Rate of compensation increase		2.50%
Target Asset Allocations [Abstract]
Investment performance objectives benchmark period		3 years
Maximum equity securities holdings in any one company		20.00%
Minimum [Member] | Large Cap [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		60.00%
Minimum [Member] | Mid Cap [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		0.00%
Minimum [Member] | Small Cap [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		0.00%
Minimum [Member] | International Developed Nations [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		0.00%
Minimum [Member] | International Emerging Nations [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		0.00%
Minimum [Member] | International [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		0.00%
Minimum [Member] | U.S. Treasuries [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		15.00%
Minimum [Member] | Federal Agency Securities [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		0.00%
Minimum [Member] | Corporate Bonds [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		0.00%
Minimum [Member] | Mortgage-Backed Securities [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		15.00%
Minimum [Member] | High Yield Bonds [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		0.00%
Minimum [Member] | Cash and Money Market Funds [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		0.00%
Minimum [Member] | Equity Securities [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		50.00%
Asset allocation of plan assets		50.00%
Minimum [Member] | Fixed Income Securities [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		30.00%
Asset allocation of plan assets		30.00%
Maximum [Member]
Weighted-Average Assumptions Used to Determine Benefit Obligations [Abstract]
Rate of compensation increase		3.00%
Target Asset Allocations [Abstract]
Investment performance objectives benchmark period		5 years
Maximum equity securities holdings in any one company		25.00%
Maximum [Member] | Large Cap [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		95.00%
Maximum [Member] | Mid Cap [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		25.00%
Maximum [Member] | Small Cap [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		10.00%
Maximum [Member] | International Developed Nations [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		25.00%
Maximum [Member] | International Emerging Nations [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		10.00%
Maximum [Member] | International [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		20.00%
Maximum [Member] | U.S. Treasuries [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		55.00%
Maximum [Member] | Federal Agency Securities [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		22.00%
Maximum [Member] | Corporate Bonds [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		40.00%
Maximum [Member] | Mortgage-Backed Securities [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		55.00%
Maximum [Member] | High Yield Bonds [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		20.00%
Maximum [Member] | Cash and Money Market Funds [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		10.00%
Maximum [Member] | Equity Securities [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		70.00%
Asset allocation of plan assets		70.00%
Maximum [Member] | Fixed Income Securities [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations		50.00%
Asset allocation of plan assets		50.00%
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets		$ 27,575	28,124
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets		27,575	28,124
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Cash and Money Market Funds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[1]	1,205	1,064
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[1]	1,205	1,064
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Common Equity Securities [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[2]	2,686	3,031
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[2]	2,686	3,031
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Equity Mutual Funds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[3]	18,017	16,380
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[3]	18,017	16,380
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury Obligations [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets		0	0
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets		0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate and Foreign Bonds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[4]	0	0
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[4]	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fixed Income Mutual Funds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[5]	5,667	7,649
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[5]	5,667	7,649
Significant Other Observable Inputs (Level 2) [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets		4,260	2,451
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets		4,260	2,451
Significant Other Observable Inputs (Level 2) [Member] | Cash and Money Market Funds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[1]	0	0
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[1]	0	0
Significant Other Observable Inputs (Level 2) [Member] | Common Equity Securities [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[2]	0	0
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[2]	0	0
Significant Other Observable Inputs (Level 2) [Member] | Equity Mutual Funds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[3]	0	0
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[3]	0	0
Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury Obligations [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets		833	831
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets		833	831
Significant Other Observable Inputs (Level 2) [Member] | Corporate and Foreign Bonds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[4]	3,427	1,620
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[4]	3,427	1,620
Significant Other Observable Inputs (Level 2) [Member] | Fixed Income Mutual Funds [Member]
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[5]	0	0
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Fair value of plan assets	[5]	$ 0	$ 0

[1] The portfolios are designed to keep approximately three months of distributions in immediately available funds. The Company was more heavily-weighted in cash as of December 31, 2015 due to market volatility.

[2] This category includes investments in U.S. common stocks and foreign stocks trading in the U.S. widely distributed among consumer discretionary, consumer staples, healthcare, information technology, financial services, materials, industrials and energy. The individual stocks are primarily large cap stocks which track with the S&P 500 with the exception of $447 in 2014 which was invested in York Water Company common stock. In 2015, the Company repurchased the company stock previously held in the pension portfolio.

[3] This category currently includes a majority of investments in closed-end mutual funds as well as domestic equity mutual funds and international mutual funds which give the portfolio exposure to mid and large cap index funds as well as international diversified index funds.

[4] This category currently includes only U.S. corporate bonds and notes widely distributed among consumer discretionary, consumer staples, healthcare, information technology and financial services.

[5] This category includes fixed income investments in mutual funds which include government, corporate and mortgage securities of both the U.S. and other countries. The mortgage-backed securities and non-U.S. corporate and sovereign investments add further diversity to the fixed income portion of the portfolio.

XML

Employee Benefit Plans, Fair Value of Pension Plan Assets (Details) - Defined Benefit Pension Plans Combined [Member] - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2013
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets		$ 30,575	$ 31,835	$ 27,102
Fair value of plan assets invested in Company stock		447
Cash and Money Market Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[1]	1,064	1,205
Common Equity Securities [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[2]	3,031	2,686
Equity Mutual Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[3]	16,380	18,017
U.S. Treasury Obligations [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets		831	833
Corporate and Foreign Bonds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[4]	1,620	3,427
Fixed Income Mutual Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[5]	7,649	5,667
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets		28,124	27,575
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Cash and Money Market Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[1]	1,064	1,205
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Common Equity Securities [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[2]	3,031	2,686
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Equity Mutual Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[3]	16,380	18,017
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury Obligations [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets		0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate and Foreign Bonds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[4]	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fixed Income Mutual Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[5]	7,649	5,667
Significant Other Observable Inputs (Level 2) [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets		2,451	4,260
Significant Other Observable Inputs (Level 2) [Member] | Cash and Money Market Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[1]	0	0
Significant Other Observable Inputs (Level 2) [Member] | Common Equity Securities [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[2]	0	0
Significant Other Observable Inputs (Level 2) [Member] | Equity Mutual Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[3]	0	0
Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury Obligations [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets		831	833
Significant Other Observable Inputs (Level 2) [Member] | Corporate and Foreign Bonds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[4]	1,620	3,427
Significant Other Observable Inputs (Level 2) [Member] | Fixed Income Mutual Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[5]	$ 0	$ 0

[1] The portfolios are designed to keep approximately three months of distributions in immediately available funds. The Company was more heavily-weighted in cash as of December 31, 2015 due to market volatility.

[2] This category includes investments in U.S. common stocks and foreign stocks trading in the U.S. widely distributed among consumer discretionary, consumer staples, healthcare, information technology, financial services, materials, industrials and energy. The individual stocks are primarily large cap stocks which track with the S&P 500 with the exception of $447 in 2014 which was invested in York Water Company common stock. In 2015, the Company repurchased the company stock previously held in the pension portfolio.

[3] This category currently includes a majority of investments in closed-end mutual funds as well as domestic equity mutual funds and international mutual funds which give the portfolio exposure to mid and large cap index funds as well as international diversified index funds.

[4] This category currently includes only U.S. corporate bonds and notes widely distributed among consumer discretionary, consumer staples, healthcare, information technology and financial services.

[5] This category includes fixed income investments in mutual funds which include government, corporate and mortgage securities of both the U.S. and other countries. The mortgage-backed securities and non-U.S. corporate and sovereign investments add further diversity to the fixed income portion of the portfolio.

XML

Employee Benefit Plans, Defined Contribution Plan, Deferred Compensation and Other (Details)	12 Months Ended
	Dec. 31, 2015 USD ($) Employee	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Defined Contribution Plan [Abstract]
Maximum elective employee contributions	15.00%
Company matching contributions	100.00%
Maximum annual Company contribution for each employee	$ 2,800
Number of employees participating in enhanced feature of plan | Employee	19
Company's total contributions to defined contribution plan	$ 262,000	$ 239,000	$ 222,000
Maximum annual Company contribution as a percentage of employee's compensation	4.00%
Annual Company discretionary contribution	$ 1,200
Deferred Compensation [Abstract]
Present value of future obligations	3,608,000	3,576,000
Total cash value of insurance policies	3,378,000	3,567,000
Company's expenses under deferred compensation plans	380,000	658,000	(91,000)
Other Postretirement Benefits [Abstract]
Amount payable upon retiree's death	2,000
Present value of future obligations	98,000	110,000
Company's expenses under other postretirement benefit plans	$ (4,000)	$ 25,000	$ (14,000)

XML

Rate Matters (Details) - PPUC [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Rate Request Filed on May 29, 2013 [Member] | Water [Member]
Rate Matters [Abstract]
Requested dollar increase in annual revenue	$ 7,116
Authorized dollar increase in annual revenue	4,972
Rate Request Filed on May 29, 2013 [Member] | Wastewater [Member]
Rate Matters [Abstract]
Requested dollar increase in annual revenue	28
Authorized dollar increase in annual revenue	28
DSIC [Member]
Rate Matters [Abstract]
Distribution system improvement charge revenue	$ 0	$ 283	$ 1,445
DSIC [Member] | Maximum [Member]
Rate Matters [Abstract]
Distribution system improvement charge percentage over base rate	5.00%
DSIC [Member] | Minimum [Member]
Rate Matters [Abstract]
Distribution system improvement charge percentage over base rate	0.00%

XML

Notes Receivable and Customers' Advances for Construction (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) Municipality Note	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Notes Receivable and Customers' Advances for Construction [Abstract]
Number of municipalities with agreements to extend water service | Municipality	3
Number of notes receivable repaid | Note	2
Interest income on notes receivable	$ 110	$ 107	$ 101
Interest rate on notes outstanding	7.50%
Amounts Related to Water District Projects Included in Balance Sheet [Abstract]
Notes receivable, including interest	$ 255	266
Customers' advances for construction	310	626
Other customers' advances for construction	$ 7,190	$ 10,086

XML

Commitments (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) Employee
Commitments [Abstract]
Capital budget amount year one | $	$ 20,100
Capital budget amount year two | $	$ 13,100
Number of people employed | Employee	107
Number of people employed under union contract | Employee	37

XML

Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Interest Rate Swap [Abstract]
Term of debt on utilities rated A- used to discount prospective cash flows	30 years
Reduction in the fair value of swap liability	$ 172
Fair Value Estimate Not Practicable, Financial Liabilities [Abstract]
Customers' advances for construction	7,500	$ 10,712
Fair Value Estimate Not Practicable, Financial Assets [Abstract]
Notes receivable	255	266
Fair Value on a Recurring Basis [Member]
Interest Rate Swap [Abstract]
Interest rate swap	2,511	2,592
Fair Value on a Recurring Basis [Member] | Fair Value Measurements Using Significant Other Observable Inputs (Level 2) [Member]
Interest Rate Swap [Abstract]
Interest rate swap	2,511	2,592
Carrying Amount [Member]
Fair Value, Financial Liabilities [Abstract]
Long-term debt (including current maturities and excluding the discount on issuance of long-term debt)	87,542	84,885
Estimate of Fair Value [Member]
Fair Value, Financial Liabilities [Abstract]
Long-term debt (including current maturities and excluding the discount on issuance of long-term debt)	102,000	100,000
Fair Value, Estimate Not Practicable, Carrying Amount [Member]
Fair Value Estimate Not Practicable, Financial Liabilities [Abstract]
Customers' advances for construction	7,500	10,712
Fair Value Estimate Not Practicable, Financial Assets [Abstract]
Notes receivable	$ 255	$ 266

XML

Taxes Other than Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Components of Taxes Other than Income Taxes [Abstract]
Regulatory Assessment	$ 242	$ 218	$ 220
Property	334	339	364
Payroll, net of amounts capitalized	510	494	462
Capital Stock	42	59	75
Other	1	1	1
Total taxes other than income taxes	$ 1,129	$ 1,111	$ 1,122

XML

Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended									12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014		Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Quarterly Financial Data [Abstract]
Operating revenues	$ 11,617	$ 12,368	$ 11,895	$ 11,209	$ 11,499		$ 12,062	$ 11,768	$ 10,571	$ 47,089	$ 45,900	$ 42,383
Operating income	5,492	6,353	5,682	5,134	5,427		6,092	5,800	4,758	22,661	22,077	20,761
Net income	$ 3,516	$ 3,520	$ 2,925	$ 2,528	$ 3,551	[1]	$ 3,065	$ 2,757	$ 2,111	$ 12,489	$ 11,484	$ 9,654
Basic earnings per share (in dollars per share)	$ 0.27	$ 0.28	$ 0.22	$ 0.20	$ 0.28		$ 0.23	$ 0.22	$ 0.16	$ 0.97	$ 0.89	$ 0.75
Dividends declared per share (in dollars per share)	$ 0.1555	$ 0.1495	$ 0.1495	$ 0.1495	$ 0.1495		$ 0.1431	$ 0.1431	$ 0.1431	$ 0.6040	$ 0.5788	$ 0.5580
IRS TPR ongoing deduction										$ (1,438)	$ (1,342)	$ 0

[1] Fourth quarter net income includes a tax benefit of $1,342 for the full year 2014 due to the implementation of the IRS TPR.

XML

Schedule II Valuation and Qualifying Accounts (Details) - Reserve for Uncollectible Accounts [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Movement in Reserve [Roll Forward]
Balance at beginning of year	$ 325,000	$ 320,000	$ 305,000
Charged to cost and expenses	292,248	322,499	290,886
Recoveries	40,681	44,071	36,369
Deductions	342,929	361,570	312,255
Balance at end of year	$ 315,000	$ 325,000	$ 320,000