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, 2020
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)
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE			YORW		The NASDAQ Global Select Market
(Title of Class)			(Trading Symbol)		(Name of Each Exchange on Which Registered)
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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer □		Accelerated filer □				Non-accelerated filer ⌧
Small reporting company ⌧				Emerging growth company □
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
□
Indicate by check mark if the registrant has filed a report on and attestation on its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
□
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, 2020
was $625,110,599.
As of March 9 ,2021 there were 13,063,448 shares of Common Stock, no par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Company's 2021 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	7
Item 1B.	Unresolved Staff Comments	7
Item 2.	Properties	8
Item 3.	Legal Proceedings	9
Item 4.	Mine Safety Disclosures	9
PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	10
Item 6.	Selected Financial Data	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	10
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 8.	Financial Statements	20
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	50
Item 9A.	Controls and Procedures	50
Item 9B.	Other Information	51
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	51
Item 11.	Executive Compensation	51
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	52
Item 13.	Certain Relationships and Related Transactions, and Director Independence	52
Item 14.	Principal Accounting Fees and Services	52
PART IV
Item 15.	Exhibits and Financial Statement Schedules	53
Item 16.	Form 10-K Summary	57
Signatures		59

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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 and future prospects; 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;

• natural disasters, including pandemics such as the current outbreak of the novel strain of coronavirus known as “COVID-19” and the effectiveness of the Company’s pandemic plans;

• 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;

• 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; and

• the ability to obtain financing.

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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 systems and five wastewater collection and treatment systems.  The Company operates within its franchised water and wastewater territory, which covers portions of 51 municipalities within three counties in south-central Pennsylvania.  The Company is regulated by the Pennsylvania Public Utility Commission, or PPUC, for both water and wastewater 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 supplements its reservoirs with a 15-mile pipeline from the Susquehanna River to Lake Redman which provides access to an additional supply of 12.0 million gallons of untreated water per day.  The Company also owns nine wells which are capable of providing a safe yield of approximately 597,000 gallons per day to supply water to the customers of its satellite systems in Adams County.  As of December 31, 2020, the Company's average daily availability was 35.6 million gallons, and average daily consumption was approximately 19.9 million gallons.  The Company's service territory had an estimated population of 202,000 as of December 31, 2020.  Industry within the Company's service territory is diversified, manufacturing such items as fixtures and furniture, electrical machinery, food products, paper, ordnance units, textile products, air conditioning systems, laundry detergent, barbells, and motorcycles.

The Company's 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 and collection 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.  The Company continues to review and consider opportunities to expand both initiatives.

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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 competition 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, regulates the quality of the finished water supplied to customers.  The DEP requires the Company to submit monthly 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 establishes protections against microbial pathogens in community water supplies.  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 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.

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Lead and copper may enter drinking water primarily through plumbing materials.  The Company is required to comply with the Lead and Copper Rule established by the EPA and administered by the DEP.  The Company must monitor drinking water at customer taps for compliance with this rule.  If lead concentrations exceed an action level, the Company must undertake a number of additional actions to control corrosion, inform the public about steps they should take to protect their health and may be required to replace lead service lines under its control.  See “Management’s Discussion and Analysis – Environmental Matters” for a discussion of the Company’s compliance with the Lead and Copper rule.

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.  The DEP most recently inspected the Company’s dams in 2019.

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.  Recently, DEP expressed concern regarding the stability of the Lake Williams spillway in light of current design standards.  The Company is currently completing the final design and the permitting process to armor and replace the spillway of the Lake Williams dam.  The Company expects to finalize its plans in 2021 and begin construction in 2022 at a total cost of approximately $27 million.  The Lake Redman dam will be reviewed following the completion of the work on the Lake Williams dam.

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 15% 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.

Growth

(All dollar amounts are stated in thousands of dollars)

The Company continues to grow its number of customers and distribution facilities.

The growth in the number of customers of the Company is due primarily to the acquisition of water and wastewater systems and organic growth. During the year ended December 31, 2020, the Company increased its number of customers from 71,411 to 72,681.  See “Management’s Discussion and Analysis – Acquisitions and Growth” for a discussion of the Company’s recent acquisitions.

The Company continues to grow its water distribution and wastewater collection systems to provide reliable service to its expanding franchised service territory and the increasing population within that territory.  During the year ended December 31, 2020, the Company installed an additional 14,950 feet of water distribution mains and acquired an additional 32,593 feet of wastewater collection mains resulting in 987 miles of water mains and 36 miles of wastewater mains as of December 31, 2020.

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The Company’s growth in revenues is primarily a result of customer growth and increases in water and wastewater rates.  During the year ended December 31, 2020, the Company recognized revenue of $53,852, an increase of $2,274, or 4.4%, as compared to $51,578 during the year ended December 31, 2019.  In 2020, operating revenue was derived from the following sources and in the following percentages: residential, 66%; commercial and industrial, 26%; and other, 8%, which is primarily from the provision for fire service but includes other water and wastewater service-related income.  See “Management’s Discussion and Analysis – Rate Matters” for a discussion of the Company’s rate case management.

Information about Our Executive Officers

The Company presently has 108 employees, all of which are full time employees including the officers detailed in the information set forth under the caption “Executive Officers of the Company” of the 2021 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.  The SEC also maintains a website at www.sec.gov that contains reports, proxy statements, and other information about SEC registrants, including the Company.

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:

Molly E. Norton	The York Water Company	(717) 718-2942
Investor Relations &	130 East Market Street	(800) 750-5561
Communications Administrator	York, PA  17401	mollyn@yorkwater.com

Item 1A. Risk Factors.

Not applicable.

Item 1B. Unresolved Staff Comments.

None.

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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 per day, or MGD.

The Company also owns four satellite water systems in Adams County, Pennsylvania.  The systems consist of nine groundwater wells capable of providing a combined safe yield of approximately 597,000 gallons per day.

As of December 31, 2020, the Company's present average daily availability was 35.6 million gallons, and daily consumption was approximately 19.9 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 electrically driven centrifugal pumps with a combined pumping capacity of 68.0 MGD.  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 vertical turbine pumps with a combined pumping capacity of 18 MGD.  The pumping station pumps water from the Susquehanna River approximately 15 miles through a combination of 30 inch and 36 inch ductile iron main to the Company’s upper impounding dam, located at Lake Redman.

The Lake Redman Pumping Station is located in York Township adjacent to Lake Redman.  The pumping station is designed to provide a redundant source with the capacity to pump 20 MGD of untreated water through a company-owned 36 inch force main approximately 3.5 miles to the filtration plant, meeting the Company’s daily consumption needs.

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 rated capacity of 39.0 MGD, with a maximum supply of 42.0 MGD for short periods if necessary.  Based on an average daily consumption in 2020 of approximately 19.9 million gallons, the Company believes the pumping and filtering facilities are adequate to meet present and anticipated demands.

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.

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The Company has five wastewater treatment facilities located in three counties within south-central Pennsylvania.  The wastewater treatment plants are small, packaged, extended aeration activated sludge facilities with a combined average daily flow capacity of 235,000 gallons.  With a projected maximum daily demand of 123,000 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 987 miles of water main lines which range in diameter from 2 inches to 36 inches.  The distribution system includes 31 booster stations and 34 standpipes and reservoirs capable of storing approximately 58.4 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 seven wastewater collection systems of the Company have a combined approximate 174,000 feet of 6 inch and 8 inch gravity collection mains and 15,000 feet of 6 inch pressure force main along with nine redundant sewage pumping stations.

Other Properties

The Company's distribution center and material and supplies warehouse are located in Springettsbury Township and are composed of three one-story concrete block buildings aggregating 30,680 square feet.

The 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.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

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

Market Information

The common stock of The York Water Company is traded on the NASDAQ Global Select Market under the symbol YORW.

Shareholders of record (excluding individual participants in securities positions listings) as of December 31, 2020 numbered approximately 1,982.

Securities Authorized for Issuance under Equity Compensation Plans

The information required by this item with respect to securities authorized for issuance under equity compensation plans is set forth in Part III, Item 12 of this Annual Report.

Purchases of Equity Securities by the Company

The Company did not repurchase any of its securities during the fourth quarter of 2020.

Item 6. Selected Financial Data.

Not applicable.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

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

Overview

The York Water Company (the “Company”) is the oldest investor-owned water utility in the United States, operated continuously since 1816. The Company also owns and operates two wastewater collection systems and five 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.  The Company experienced increased revenues in 2020 compared to 2019 primarily due to changes in consumption patterns, a rate increase effective March 1, 2019, and an increase in the number of customers, which were partially offset by lower revenues from the distribution system improvement charge, or DSIC.

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 2020, operating revenue was derived from the following sources and in the following percentages: residential, 66%; commercial and industrial, 26%; and other, 8%, which is primarily from the provision for fire service, but includes other water and wastewater service-related income.  The diverse customer mix helps to reduce volatility in consumption.

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.

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The Company has entered into agreements with several municipalities to provide sewer billing and collection services.  The Company also has a service line protection program on a targeted basis.  The Company continues to review and consider opportunities to expand both initiatives to further diversify the business.

In addition to increasing revenue, the Company consistently focuses on minimizing costs without sacrificing water quality or customer service.  Paperless billing, expanding online services, negotiation of favorable electric, banking, and other costs, as well as taking advantage of the Tax Cuts and Jobs Act of 2017, or the 2017 Tax Act, and the IRS tangible property regulations, or TPR, are examples of the Company’s recent efforts to minimize costs.

Impact of COVID-19

In December 2019, an outbreak of a novel strain of coronavirus (“COVID-19”) was reported.  On March 6, 2020, Governor Tom Wolf signed an emergency disaster declaration for the Commonwealth of Pennsylvania which was extended for an additional ninety days on June 3, 2020, September 1, 2020, and November 29, 2020.  On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.  Developments in this area continue daily at the local, state, and national levels.  The Company is taking steps, consistent with directions from local, state, and federal authorities, to mitigate known risks with the health and safety of its employees and customers as its first priority.

The Company is an essential, life-sustaining business and has continued normal operations.  The Company continues to monitor guidance from state and local authorities and has made some modifications to its operations in order to comply with Pennsylvania’s guidelines.  This includes implementing enhanced safety procedures in its lobby and when entering customers’ homes and businesses as well as implementing social distancing practices such as halting unnecessary gatherings and travel.  The Company has evaluated and re-prioritized some of its capital projects, but the restrictions are not expected to materially impede the Company’s ability to complete its planned capital expenditures or acquisitions.  The Company has not experienced any supply chain disruptions and continues to maintain relationships with its vendors to identify issues as early as possible.  The Company believes it has sufficient liquidity and access to the capital markets if needed.

As a water and wastewater utility, it is the Company’s mission to provide uninterrupted water and wastewater service.  Due to the effect of COVID-19 on the general public, in compliance with an order from the PPUC, the Company paused shut-off procedures for delinquent customers on March 13, 2020.  In addition, the Company stopped billing late payment charges.  These customers were billed at normal tariff rates for the water they used, and wastewater service provided.  Based on the October 8, 2020 order from the PPUC, the Company resumed normal shut-off procedures and began billing late payment charges for most customers in January 2021.  However, the Company will not terminate service and will waive late payment charges for certain “protected customers” as defined by the order.

The Company may continue to experience an increase in residential demand while commercial and industrial demand may decline based on many government, commercial, and industrial concerns which have curtailed production, or limited capacity, due to government orders or in response to changing economic conditions, and simultaneously, many employees are now teleworking or have been laid off or furloughed.  The duration and magnitude of these changes is currently unknown and difficult to predict.

To date, there has been no material impact on the Company’s workforce, operations, financial performance, liquidity, or supply chain as a result of COVID-19.  However, the ultimate duration and severity of the pandemic or its effects on the economy, the capital and credit markets, or the Company’s workforce, customers, and suppliers, as well as governmental and regulatory responses, are uncertain.

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.

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The Company’s performance in 2020 was strong under the above measures.  Operating revenues increased in 2020 compared to 2019 primarily due to changes in consumption patterns, a rate increase effective March 1, 2019, and an increase in the number of customers.  This increase was partially offset by the lower revenues from the DSIC.  The increase in operating revenues offset the increases in operating expenses. Other net expenses decreased primarily due to reduced interest expense and a non-recurring gain on life insurance.  The Company incurred lower income taxes primarily due to a higher deduction for the tax benefit under the IRS TPR.  The overall effect was an increase in net income in 2020 over 2019 of 15.2% and a return on year end common equity of 11.6%, higher than the 2019 result of 10.7% and the five-year historical average of 10.8%.

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 26.7%.  In 2020, the ratio was higher than the average at 30.8% due primarily to lower income taxes than are included in the historical average.  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.

2020 Compared with 2019

Net income for 2020 was $16,598, an increase of $2,196, or 15.2%, from net income of $14,402 for 2019.  The primary contributing factors to the increase were higher operating revenues and a gain on life insurance which were partially offset by higher operating expenses.

Operating revenues for the year increased $2,274, or 4.4%, from $51,578 for 2019 to $53,852 for 2020.  The primary reasons for the increase were changes in consumption patterns and a rate increase effective March 1, 2019.  Total per capita consumption for 2020 was approximately 1.1% lower than the same period of last year.  However, the Company experienced an increase in residential demand as many employees are now teleworking or have been laid off or furloughed, while commercial and industrial demand declined based on many government, commercial, and industrial concerns which have curtailed production, or limited capacity, due to government orders or in response to changing economic conditions.  The Company reduced revenue by $1 in 2020 and $325 in 2019, by recording a regulatory liability for the benefit of the lower tax rate effective January 1, 2018 resulting from the enactment of the 2017 Tax Act, which the Company agreed to give back to customers as part of the new rate order, including the gross-up of revenue necessary to return the effect of the temporary tax difference.  Growth in the customer base also added to revenues.  The average number of water customers served in 2020 increased as compared to 2019 by 631 customers, from 68,288 to 68,919 customers.  The average number of wastewater customers served in 2020 increased as compared to 2019 by 560 customers, from 2,519 to 3,079 customers, due to the recent acquisitions.  The increased revenues were partially offset by a $249 decrease from a lower DSIC allowed by the PPUC.  The DSIC reset to zero on March 1, 2019 when the rate order took effect.  In 2021, the Company expects revenues to show a modest increase due to an increase in the number of water and wastewater customers from acquisitions and growth within the Company’s service territory.  The duration and severity of the COVID-19 pandemic including any resulting economic slowdown or changes in consumption patterns could impact results.  Other regulatory actions and weather patterns could also impact results.

Operating expenses for 2020 increased $1,629, or 5.9%, from $27,792 for 2019 to $29,421 for 2020.  The increase was primarily due to higher expenses of approximately $489 for depreciation, $355 for a higher provision for uncollectible accounts, $287 for wastewater treatment, and $219 for outside services.  Also adding to the increase were expenses of $76 for water treatment chemicals and $66 for purchased power.  Other expenses increased by a net of $330.  The increased expenses were partially offset by reduced expenses of $72 for health insurance, $71 for water treatment plant maintenance, and $50 for wages.  In 2021, 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 treat water and wastewater and to maintain and extend the distribution and collection systems continue to rise.

Interest on debt for 2020 decreased $417, or 8.1%, from $5,124 for 2019 to $4,707 for 2020.  The decrease was primarily due to lower interest on long-term debt due to the refinancing of various debt issues.  The average debt outstanding under the lines of credit was $7,467 for 2020 and $5,070 for 2019.  The weighted average interest rate on the lines of credit was 1.59% for 2020 and 3.47% for 2019.  Interest expense for 2021 is expected to be slightly higher due to additional long-term debt and continued borrowings under the line of credit.

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Allowance for funds used during construction increased $164, from $366 in 2019 to $530 in 2020 due to a higher volume of eligible construction.  Allowance for funds used during construction in 2021 is expected to increase based on a projected increase in the amount of eligible construction.

A non-recurring gain on life insurance of $515 was recorded in 2020 as a result of a death benefit from a life insurance policy.  No similar gains are anticipated in 2021.

Other income (expenses), net for 2020 reflects decreased expenses of $144 as compared to 2019.  Lower retirement expenses of approximately $43 and higher earnings on life insurance policies of approximately $42 were the primary reasons for the decrease.  Other expenses decreased by a net of $78.  Higher charitable contributions of $19 partially offset the decrease.  In 2021, other income (expenses) will be largely determined by the change in market returns and discount rates for retirement programs and related assets.

Income taxes for the 2020 decreased $222, or 9.9%, compared to 2019, due primarily to higher deductions from the IRS TPR partially offset by higher taxable income.  The Company’s effective tax rate was 10.8% for 2020 and 13.5% for 2019.  The lower effective tax rate is primarily due to higher deductions from the TPR and a non-taxable gain on life insurance.  The Company's effective tax rate for 2021 will largely be determined by the level of eligible asset improvements expensed for tax purposes under TPR.

Rate Matters

See Note 10 to the Company’s financial statements included herein for a discussion of its rate matters.

The benefit from the implementation of the IRS TPR impacts the rate matters of the Company.  The most recent rate order took into account the lower income taxes which resulted from the implementation of the IRS TPR, as well as the lower income taxes from the 2017 Tax Act, effectively reducing the amount of revenue required and lowering the Company’s rate increase.

Acquisitions and Growth

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

On October 8, 2013, the Company signed an agreement to purchase the wastewater collection and treatment assets of SYC WWTP, L.P. in Shrewsbury and Springfield Townships, York County, Pennsylvania.  On July 1, 2020, the Company signed an agreement to purchase the Albright Trailer Park water assets and wastewater collection assets of R.T. Barclay, Inc. in Springfield Township, York County, Pennsylvania.  Completion of the acquisitions is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in 2021, at which time the Company will add approximately 90 combined wastewater customers and approximately 60 water customers through an interconnection with its current water distribution system.  The wastewater customers of the Albright Trailer Park are currently served by SYC WWTP, L.P. and the water customers are currently served by the Company, each through a single customer connection to the park.

On March 4, 2019, the Company signed an agreement to purchase the wastewater collection assets of West Manheim Township in York County, Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in 2021 at which time the Company will add approximately 1,800 wastewater customers.  These wastewater customers are currently water customers of the Company.

On May 27, 2020, the Company signed an agreement to purchase the water assets and wastewater collection and treatment assets of Country View Manor Community, LLC in Washington Township, York County, Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in 2021 at which time the Company will add approximately 50 water and wastewater customers.

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

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On May 10, 2017, the Company signed an emergency interconnect agreement with Dallastown-Yoe Water Authority.  The effectiveness of this agreement is contingent upon receiving approval from all required regulatory authorities.  Approval is expected to be granted in 2021 at which time the Company will begin construction of a water main extension to a single point of interconnection and either supply a minimum agreed upon amount of water to the authority, receive a payment in lieu of water, or provide water during an emergency, at current tariff rates.

Capital Expenditures

During 2020, the Company invested $32,123 in construction expenditures for routine items, the replacement of a standpipe, reimbursement to the developer for its construction of the water and wastewater system of the Amblebrook development in Adams County, Pennsylvania upon approval from the PPUC to provide service, improvements to a raw water pumping station, expansion of a wastewater treatment plant, as well as various replacements and improvements to infrastructure.  In addition, the Company invested $1,176 in the acquisition of two wastewater systems.  The Company replaced or relined approximately 56,000 feet of main in 2020.  The Company was able to fund construction expenditures using internally-generated funds, line of credit borrowings, proceeds from its stock purchase plans, and customer advances and contributions from developers, municipalities, customers, or builders.  See Notes 1, 4 and 5 to the Company’s financial statements included herein.

The Company anticipates construction and acquisition expenditures for 2021 and 2022 of approximately $36,000 and $40,000, respectively, exclusive of any acquisitions not yet approved.  In addition to routine transmission and distribution projects, a portion of the anticipated 2021 and 2022 expenditures will be for additional main extensions, dam improvements, an elevated water tank, an upgrade to the enterprise software system, completion of a wastewater treatment plant, and various replacements of infrastructure.  The Company intends to use primarily internally-generated funds for its anticipated 2021 and 2022 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 between 5% and 10% of funding requirements in 2021 and 2022.  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 2021 and 2022, to fund anticipated construction and acquisition expenditures.

Liquidity and Capital Resources

Cash

The Company manages its cash through a cash management account that is directly connected to its line of credit.  Excess cash generated automatically pays down outstanding borrowings under the line of credit arrangement.  If there are no outstanding borrowings, the cash is used as an earnings credit to reduce banking fees.  Likewise, if additional funds are needed beyond what is generated internally for payroll, to pay suppliers, to fund capital expenditures, or to pay debt service, funds are automatically borrowed under the line of credit.  As of December 31, 2020, the Company borrowed $6,700 under its line of credit and incurred a cash overdraft on its cash management account of $1,263.  The cash management facility connected to the line of credit 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.

Restricted Cash

The Company held $5,000 in restricted cash which was the bid deposit for a potential acquisition.  The Company expects the $5,000 in restricted cash to become unrestricted in the first quarter of 2021.

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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 2020, higher revenue as compared to 2019 and a weakening in the timeliness of payments resulted in an increase in accounts receivable – 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.  During 2020, management’s assessment included consideration of the COVID-19 pandemic along with past trends during times of economic instability and regulations from the PPUC regarding customer turn-offs and collections, and determined an increase in its allowance for doubtful accounts was warranted.  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.

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 2020, the Company generated $20,235 internally as compared to $18,881 in 2019.  The increase from 2019 was primarily due to higher net income and lower interest 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, 2020, the Company maintained an unsecured line of credit in the amount of $50,000 at an interest rate of LIBOR plus 1.05% with an unused commitment fee and an interest rate floor which matures September 2022.  The Company had $6,700 in outstanding borrowings under its line of credit as of December 31, 2020.  The interest rate on line of credit borrowings as of December 31, 2020 was 1.30%.  The Company expects to renew this line of credit as it matures under similar terms and conditions.

The Company has taken steps to manage the risk of reduced credit availability.  It has established a committed line of credit with an increase in the total amount available and a 2-year revolving maturity that cannot be called on demand.  There is no guarantee that the Company will be able to obtain sufficient lines of credit with favorable terms in the future.  If the Company is unable to obtain sufficient lines of credit or to refinance its line of credit borrowings with long-term debt or equity when necessary, it may have to eliminate or postpone capital expenditures.  Management believes the Company will have adequate capacity under its current line of credit to meet financing needs throughout 2021.

Long-term Debt

The Company’s loan agreements contain various covenants and restrictions.  Management believes it is currently in compliance with all of these restrictions.  See Note 6 to the Company’s financial statements included herein for additional information regarding these restrictions.

On September 30, 2020, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $30,000 aggregate principal amount of the Company’s senior notes.  The senior notes bear interest at 3.24% per annum payable semiannually and mature on September 30, 2050.  The senior notes are unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting issuance costs, of approximately $29,838.  The net proceeds were used to refinance the $6,500 aggregate principal amount of the Company’s 10.05% Senior Notes, Series C, due September 30, 2020, to refinance line of credit borrowings incurred by the Company as interim financing for various capital projects, to fund acquisitions and for general corporate purposes.

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The Company’s total long-term debt as a percentage of the total capitalization, defined as total common stockholders’ equity plus total long-term debt, was 46.9% as of December 31, 2020, compared with 43.7% as of December 31, 2019.  The Company expects to allow the debt percentage to trend upward until it approaches fifty percent before considering 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 ability to generate more cash internally, the Company has been able to keep its ratio below fifty percent.  See Note 6 to the Company’s financial statements included herein for the details of its long-term debt outstanding as of December 31, 2020.

The variable rate lines of credit and the interest rate swap of the Company use the London Interbank Offering Rate (“LIBOR”) as a benchmark for establishing the rates.  The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to stop encouraging or compelling banks to submit rates for the calculation of LIBOR rates after 2021.  This indicates that the continuation of LIBOR on the current basis is not guaranteed after 2021 and, based on the foregoing, it appears likely that LIBOR will be discontinued or modified by 2021.  The Company’s line of credit agreement explicitly states that another index may be used if LIBOR is discontinued or otherwise unavailable.  The Company believes that it is implicit in its other agreements that a successor rate to LIBOR may be used.  The Company is not yet aware what successor rate will be used and therefore cannot estimate the impact to the Company’s financial position, results of operations and cash flows, but it could include an increase in the cost of the variable rate indebtedness.

Income Taxes, Deferred Income Taxes and Uncertain Tax Positions

The 2017 Tax Act, among other things, reduces the federal statutory corporate tax rate for tax years beginning in 2018 from 34% to 21%, eliminates certain deductions, and eliminates bonus depreciation on qualified water and wastewater property.

The Company filed for a change in accounting method under the IRS TPR effective in 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.  As a result of the ongoing deduction, the net income tax benefits of $1,720 and $1,426 for the years ended December 31, 2020 and 2019, 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.  It also results 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.  The Company was permitted to make this deduction for prior years.  As a result of the catch-up deduction, income tax benefits of $3,887 were deferred as a regulatory liability.  After receiving approval from the PPUC in its most recent rate order, the Company began to recognize the catch-up deduction, recorded as a regulatory liability, over 15 years beginning March 1, 2019.  As a result, the Company recognized $259 and $216 in income taxes during the years ended December 31, 2020 and 2019, respectively.

The Company’s effective tax rate will largely be determined by the level of eligible asset improvements expensed for tax purposes that would have been capitalized for tax purposes prior to the implementation of the TPR.

The Company has a substantial deferred income tax asset primarily due to the excess accumulated deferred income taxes on accelerated depreciation from the 2017 Tax Act and the differences between the book and tax balances of the customers’ advances for construction and contributions in aid of construction and deferred compensation plans.  The Company 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 depreciation deduction available for federal tax purposes which creates differences between book and tax depreciation expense.  The Company expects this trend to continue as it makes significant investments in capital expenditures subject to accelerated depreciation or TPR.

The Company has determined there are no uncertain tax positions that require recognition as of December 31, 2020.  See Note 14 to the Company’s financial statements included herein for additional details regarding income taxes.

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Common Stock

Common stockholders’ equity as a percent of the total capitalization was 53.1% as of December 31, 2020, compared with 56.3% as of December 31, 2019.  The ratio decreased in 2020 due to higher debt primarily from increased capital expenditures.  The volume of share repurchases and higher debt from capital expenditures, 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 April 9, 2020, 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 2021, 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.

Physical and Cyber Security

The Company maintains security measures at its facilities, and collaborates with federal, state, and local authorities, and industry trade associations regarding information on possible threats and security measures for water and wastewater utility operations.  The costs incurred are expected to be recoverable in water and wastewater rates and are not expected to have a material impact on its business, financial condition, or results of operations.

The Company relies on information technology systems in connection with the operation of the business, especially with respect to customer service, billing, accounting, and in some cases, the monitoring and operation of treatment, storage, and pumping facilities.  In addition, the Company relies on these systems to track utility assets and to manage maintenance and construction projects, materials and supplies, and human resource functions.  The information technology systems may be vulnerable to damage or interruption from cyber security attacks or other cyber-related events, including, but not limited to, power loss, computer systems failures, internet, telecommunications or data network failures, physical and electronic loss of data, computer viruses, intentional security breaches, hacking, denial of service actions, misappropriation of data, and similar events.  In some cases, administration of certain functions may be outsourced to third-party service providers that could also be targets of cyber security attacks.  A loss of these systems, or major problems with the operation of these systems, could harm the business, financial condition, and results of operations of the Company through the loss or compromise of customer, financial, employee, or operational data, disruption of billing, collections or normal field service activities, disruption of electronic monitoring and control of operational systems, and delays in financial reporting and other normal management functions.

Possible impacts associated with a cyber security attack or other events may include remediation costs related to lost, stolen, or compromised data, repairs to data processing systems, increased cyber security protection costs, adverse effects on our compliance with regulatory and environmental laws and regulation, including standards for drinking water, litigation, and reputational damage.

The Company has implemented processes, procedures, and controls to prevent or limit the effect of these possible events and maintains insurance to help defray costs associated with cyber security attacks.  The Company has not experienced a material impact on business or operations from these attacks.  Although the Company does not believe its systems are at a materially greater risk of cyber security attacks than other similar organizations and despite the implementation of robust security measures, the Company cannot provide assurance that the insurance will fully cover the costs of a cyber security event, and its robust security measures do not guarantee that reputation and financial results will not be adversely affected by such an incident.

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Environmental Matters

The Company entered into a consent order agreement with the Pennsylvania Department of Environmental Protection in December 2016 after the Company determined it exceeded the action level for lead as established by the Lead and Copper Rule, or LCR, issued by the U.S. Environmental Protection Agency.  The Company did not have an exceedance in any subsequent compliance test.  Under the agreement, the Company committed to exceed the LCR replacement schedule by replacing all of the remaining known company-owned lead service lines within four years from the agreement.  The cost for these service line replacements was approximately $2,740 and $2,713 through December 31, 2020 and 2019, respectively, and is included in utility plant.  As of December 31, 2020, all known company-owned lead service lines have been replaced. Any additional company-owned lead service lines that are discovered will be replaced but are not expected to have a material impact on the financial position of the Company.

The Company was granted approval by the PPUC to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the agreement.  The tariff modification allows the Company to replace customer-owned service lines at its own initial cost.  The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period.  The cost for the customer-owned lead service line replacements was approximately $1,204 and $1,000 through December 31, 2020 and 2019, respectively, and is included as a regulatory asset.  Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $1,500.  This estimate is subject to adjustment as more facts become available.

Dividends

During 2020, the Company's dividend payout ratios relative to net income and net cash provided by operating activities were 57.2% and 46.4%, respectively.  During 2019, the Company's dividend payout ratios relative to net income and net cash provided by operating activities were 63.1% and 47.6%, respectively.  During the fourth quarter of 2020, the Board of Directors increased the dividend by 4.00% from $0.1802 per share to $0.1874 per share per quarter.

The Company’s Board of Directors declared a dividend in the amount of $0.1874 per share at its January 2021 meeting.  The dividend is payable on April 15, 2021 to shareholders of record as of February 26, 2021.  While the Company expects to maintain this dividend amount in 2021, future dividends will be dependent upon the Company’s earnings, financial condition, capital demands and other factors and will be determined by the Company’s Board of Directors.  See Note 6 to the Company’s financial statements included herein for restrictions on dividend payments.

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.

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.

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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 used compensation increases of 2.5% to 3.0% in 2019 and 2020.

The Company adopted a new mortality table in 2019, the Pri-2012, using the white collar table for the administrative and general plan and the blue collar table for the union plan, and the Company adopted the MP-2020 mortality improvement scale in 2020.  Using the new mortality table slightly decreased the life expectancy of pension plan participants, resulting in a slight decrease to the pension benefit obligation, and ultimately, an increase in the Company’s funded status of the plans.

The Company selected its December 31, 2020 and 2019 discount rates based on the FTSE Pension Liability Index.  This index uses 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 2.30% at December 31, 2020 and 3.10% at December 31, 2019.

Adopting a new mortality table that represents a change in life expectancy and choosing a different discount rate normally changes the amount of pension expense and the corresponding liability.  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 6.50% as its expected rate of return in 2019 and 2020.  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 11 to the Company’s financial statements included herein for additional details regarding the pension plans.

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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.  The Company also believes it has appropriately applied the provisions of the 2017 Tax Act including properly applying the accounting standards related to the 2017 Tax Act.  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. For risk management purposes, the Company uses a derivative financial instrument, an interest rate swap agreement discussed in Note 7 to the financial statements included herein.  The Company does not 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

There are currently no recent accounting pronouncements that are expected to have a material impact to the Company’s financial statements.

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

Not applicable.

Item 8. Financial Statements.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of

The York Water Company

Opinion on the Financial Statements

We have audited the accompanying balance sheets of The York Water Company (the "Company") as of December 31, 2020 and 2019, the related statements of income, common stockholders' equity, and cash flows for the years then ended and the related notes and financial statement schedule listed in Item 15(a)2 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ Baker Tilly US, LLP (formerly known as Baker Tilly Virchow Krause, LLP)

We have served as the Company’s auditor since 2003.

York, Pennsylvania

March 9, 2021

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THE YORK WATER COMPANY

Balance Sheets

(In thousands of dollars, except per share amounts)

	Dec. 31, 2020			Dec. 31, 2019
ASSETS
UTILITY PLANT, at original cost	$	438,670		$	401,383
Plant acquisition adjustments		(3,707	)		(3,318	)
Accumulated depreciation		(91,340	)		(84,841	)
Net utility plant		343,623			313,224
OTHER PHYSICAL PROPERTY, net of accumulated depreciation
of $458 in 2020 and $435 in 2019		742			769
CURRENT ASSETS:
Cash and cash equivalents		2			2
Restricted cash		5,000			–
Accounts receivable, net of reserves of $655 in 2020 and $305 in 2019		5,184			4,421
Unbilled revenues		2,847			2,276
Recoverable income taxes		721			547
Materials and supplies inventories, at cost		1,010			1,007
Prepaid expenses		1,526			1,131
Total current assets		16,290			9,384
OTHER LONG-TERM ASSETS:
Prepaid pension cost		2,209			1,819
Note receivable		255			255
Deferred regulatory assets		39,893			34,189
Other assets		3,945			3,889
Total other long-term assets		46,302			40,152
Total Assets	$	406,957		$	363,529

The accompanying notes are an integral part of these statements.

Page 22

THE YORK WATER COMPANY

Balance Sheets

(In thousands of dollars, except per share amounts)

	Dec. 31, 2020		Dec. 31, 2019
STOCKHOLDERS' EQUITY AND LIABILITIES
COMMON STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 13,060,817 shares in 2020 and 13,014,898 shares in 2019	$	85,935	$	83,976
Retained earnings		57,317		50,209
Total common stockholders' equity		143,252		134,185
PREFERRED STOCK, authorized 500,000 shares, no shares issued		–		–
LONG-TERM DEBT, excluding current portion		123,573		94,535
COMMITMENTS		–		–
CURRENT LIABILITIES:
Current portion of long-term debt		–		6,500
Accounts payable		6,540		3,452
Dividends payable		2,192		2,096
Accrued compensation and benefits		1,417		1,247
Accrued interest		959		914
Deferred regulatory liabilities		525		609
Other accrued expenses		360		338
Total current liabilities		11,993		15,156
DEFERRED CREDITS:
Customers' advances for construction		10,326		7,844
Deferred income taxes		43,538		40,426
Deferred employee benefits		4,793		4,317
Deferred regulatory liabilities		25,444		24,790
Other deferred credits		2,731		2,247
Total deferred credits		86,832		79,624
Contributions in aid of construction		41,307		40,029
Total Stockholders' Equity and Liabilities	$	406,957	$	363,529

The accompanying notes are an integral part of these statements.

Page 23

THE YORK WATER COMPANY

Statements of Income

(In thousands of dollars, except per share amounts)

	Year Ended December 31
	2020			2019
OPERATING REVENUES	$	53,852		$	51,578
OPERATING EXPENSES:
Operation and maintenance		10,781			10,387
Administrative and general		9,258			8,517
Depreciation and amortization		8,177			7,688
Taxes other than income taxes		1,205			1,200
		29,421			27,792
Operating income		24,431			23,786
OTHER INCOME (EXPENSES):
Interest on debt		(4,707	)		(5,124	)
Allowance for funds used during construction		530			366
Other pension costs		(1,362	)		(1,451	)
Gain on life insurance		515			–
Other income (expenses), net		(791	)		(935	)
		(5,815	)		(7,144	)
Income before income taxes		18,616			16,642
Income taxes		2,018			2,240
Net Income	$	16,598		$	14,402
Basic Earnings Per Share	$	1.27		$	1.11
Diluted Earnings Per Share	$	1.27		$	1.11

The accompanying notes are an integral part of these statements.

Page 24

THE YORK WATER COMPANY

Statements of Common Stockholders' Equity

(In thousands of dollars, except per share amounts)

For the Years Ended December 31, 2020 and 2019

	Common Stock Shares		Common Stock Amount		Retained Earnings			Total
Balance, December 31, 2018		12,943,536	$	81,305	$	44,890		$	126,195
Net income		–		–		14,402			14,402
Cash dividends declared, $0.7001 per share		–		–		(9,083	)		(9,083	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		64,399		2,505		–			2,505
Stock-based compensation		6,963		166		–			166
Balance, December 31, 2019		13,014,898		83,976		50,209			134,185
Net income		–		–		16,598			16,598
Cash dividends declared, $0.7280 per share		–		–		(9,490	)		(9,490	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		41,088		1,805		–			1,805
Stock-based compensation		4,831		154		–			154
Balance, December 31, 2020		13,060,817	$	85,935	$	57,317		$	143,252

The accompanying notes are an integral part of these statements.

Page 25

THE YORK WATER COMPANY

Statements of Cash Flows

(In thousands of dollars, except per share amounts)

	Year Ended December 31
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	16,598		$	14,402
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on life insurance		(515	)		–
Depreciation and amortization		8,177			7,688
Stock-based compensation		154			166
Increase in deferred income taxes		88			641
Other		552			251
Changes in assets and liabilities:
(Increase) decrease in accounts receivable and unbilled revenues		(1,948	)		282
Increase in recoverable income taxes		(174	)		(547	)
Increase in materials and supplies, prepaid expenses, prepaid pension cost, regulatory and other assets		(8,205	)		(5,903	)
Increase in accounts payable, accrued compensation and benefits, accrued expenses, deferred employee benefits, regulatory liabilities, and other deferred credits		5,463			2,129
Increase (decrease) in accrued interest and taxes		45			(228	)
Net cash provided by operating activities		20,235			18,881
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions, including debt portion of allowance for funds used during construction of $296 in 2020 and $205 in 2019		(32,123	)		(18,425	)
Acquisitions of wastewater systems		(1,176	)		(2,112	)
Cash received from surrender of life insurance policies		672			–
Net cash used in investing activities		(32,627	)		(20,537	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Customers' advances for construction and contributions in aid of construction		3,155			1,695
Repayments of customer advances		(419	)		(396	)
Proceeds of long-term debt issues		62,156			94,043
Debt issuance costs		(162	)		(613	)
Repayments of long-term debt		(39,628	)		(85,906	)
Repayments under short-term line of credit agreements		–			(1,000	)
Changes in cash overdraft position		(121	)		314
Issuance of common stock		1,805			2,505
Dividends paid		(9,394	)		(8,986	)
Net cash provided by financing activities		17,392			1,656
Net change in cash, cash equivalents, and restricted cash		5,000			–
Cash, cash equivalents, and restricted cash at beginning of period		2			2
Cash, cash equivalents, and restricted cash at end of period	$	5,002		$	2
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	4,180		$	4,821
Income taxes		2,429			2,230
Supplemental schedule of non-cash investing and financing activities:
Accounts payable includes $3,022 in 2020 and $1,029 in 2019 for the construction of utility plant.
Contributions in aid of construction includes $1,024 recorded as part of the Felton Borough acquisition.
Reconciliation of cash, cash equivalents, and restricted cash reported in the Balance Sheets
Cash and cash equivalents	$	2		$	2
Restricted cash		5,000			–
Cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	5,002		$	2

The accompanying notes are an integral part of these statements.

Page 26

Notes to Financial Statements

(In thousands of dollars, except per share amounts)

1.  Significant Accounting Policies

The primary business of The York Water Company, or the Company, is to impound, purify and distribute water.  The Company also owns and operates two wastewater collection systems and five wastewater collection and treatment systems.  The Company operates within its franchised territory located in three counties within south-central 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, 2020 and 2019, utility plant includes a net credit acquisition adjustment of $3,707 and $3,318, 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 $67 and $61 for the years ended December 31, 2020 and 2019, respectively.

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	2020		2019		of remaining lives
Mains and accessories	$	212,164	$	200,954	10 – 86 years
Services, meters and hydrants		80,590		77,501	17 – 51 years
Operations structures, reservoirs and water tanks		65,617		63,530	9 – 58 years
Pumping and treatment equipment		34,163		33,124	6 – 30 years
Office, transportation and operating equipment		15,520		14,464	3 – 22 years
Land and other non-depreciable assets		3,478		3,393	–
Utility plant in service		411,532		392,966
Construction work in progress		27,138		8,417	–
Total Utility Plant	$	438,670	$	401,383

Page 27

The effective rate of depreciation was 2.33% in 2020 and 2.29% in 2019, 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 an original 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 considers any cash account that it cannot access on demand due to contractual or legal reasons to be restricted cash.

At December 31, 2020, the Company held $5,000 in restricted cash which was a bid deposit held in escrow for a potential acquisition.  At December 31, 2019, the Company held no restricted cash.

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.

Materials and Supplies Inventories

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

Note Receivable

Note receivable is recorded at cost and represents amounts due from a municipality for construction of water mains in their 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.

Page 28

Regulatory assets and liabilities are comprised of the following:

	December 31				Remaining Recovery
	2020		2019		Periods
Assets
Income taxes	$	28,200	$	24,405	Various
Postretirement benefits		–		365	-
Unrealized swap losses		2,700		2,227	1 – 9 years
Utility plant retirement costs		5,968		5,012	5 years
Customer-owned lead service line replacements		1,081		944	Various
Income taxes on customers’ advances for construction and contributions in aid of construction		1,815		998	Various
Service life study expenses		8		13	2 years
Rate case filing expenses		121		225	1 year
	$	39,893	$	34,189
Liabilities
Excess accumulated deferred income taxes on accelerated depreciation	$	13,826	$	14,008	Various
Income taxes		8,706		7,494	Various
IRS TPR catch-up deduction		3,412		3,671	13 years
Postretirement benefits		25		–	Not yet known
Revenue reduction for tax rate change		–		226	-
	$	25,969	$	25,399

The regulatory asset for income taxes includes (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.

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 term of 9 years.

Utility plant retirement costs represents costs already incurred for the removal of assets, which are expected to be recovered over a five-year period in rates, through depreciation expense.

The Company was granted approval by the PPUC to modify its tariff to replace lead customer-owned service lines that are discovered when the Company replaces its lead service lines over the remaining three years, and to include the cost of the annual replacement of up to 400 lead customer-owned service lines whenever they are discovered, regardless of the material used for the company-owned service line over nine years.  The tariff modification allows the Company to replace customer-owned service lines at its own initial cost and record the costs as a regulatory asset to be recovered in future base rates to customers.  The recovery period was established in the most recent rate order at four years beginning March 1, 2019.  The recovery period for the customer-owned lead service line replacements completed subsequent to the most recent rate order will begin after the next rate order.

Service life study expenses are deferred and amortized over their remaining life of two years.  Rate case filing expenses are deferred and amortized over their remaining life of one year.

Page 29

Pursuant to the Tax Cuts and Jobs Act of 2017, or 2017 Tax Act, customers’ advances for construction and contributions in aid of construction are considered taxable income.  The Company’s tariff allows the Company to record these income taxes for inclusion in rate base.  This asset is recognized for ratemaking purposes on a cash or flow-through basis and will be recovered in rates as it reverses.

Under normalization rules applicable to public utility property included in the 2017 Tax Act, the excess accumulated deferred income taxes on accelerated depreciation from lowering of the enacted federal statutory corporate tax rate is recorded as a regulatory liability.  The benefit will be given back to customers in rates over the remaining regulatory life of the property.

The regulatory liability for income taxes includes deferred taxes related to excess accumulated deferred income taxes on accelerated depreciation, other postretirement benefits, customers’ advances for construction and contributions in aid of construction, and bad debts, as well as deferred investment tax credits.  These liabilities will be given back to customers in rates, as tax deductions occur over the next 1 to 50 years.

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.  The period over which it will be given back to customers in rates was established in the most recent rate order at 15 years beginning March 1, 2019.

Postretirement benefits include the difference between contributions and deferred pension expense and the overfunded status of the pension plans.  The overfunded status represents the difference between the projected benefit obligation and the fair market value of the assets.  This liability will change in future years based on the amount of contributions made and market returns.  The liability will be given back to customers in rates over some period determined by the PPUC in a future rate filing.  Postretirement benefits was a regulatory asset as of December 31, 2019.

Pursuant to a rate order approved by the PPUC, the Company has agreed to return the 2018 income tax savings pursuant to the 2017 Tax Act, the associated tax gross-up, and the excess accumulated deferred income taxes on accelerated depreciation to customers as a reconcilable negative surcharge on bills.  The Company began giving back the liability over one year  beginning March 1, 2019 and was fully returned to customers in 2020.

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.

Deferred Debt Expense

Deferred debt expense is amortized on a straight-line basis over the term of the related debt and is presented on the balance sheet as a direct reduction from long-term debt.

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.

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.

Page 30

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.  These unrealized gains and losses are 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 $342 in 2020 and $221 in 2019.  The overall swap result was a loss of $815 in 2020 and $649 in 2019.  During the twelve months ending December 31, 2021, the Company expects to reclassify $370 (before tax) from regulatory assets to interest expense.

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

Stock-Based Compensation

The Company records compensation expense in the financial statements for stock-based awards based on the grant date fair value of those awards.  Stock-based compensation expense is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term.  Forfeitures are recognized as they occur.

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, 2020 and 2019, deferred investment tax credits amounted to $500 and $539, respectively.

The Company filed for a change in accounting method under the IRS TPR effective in 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”).  After receiving approval from the PPUC in its most recent rate order, the Company began to recognize the catch-up deduction, recorded as a regulatory liability, over 15 years beginning March 1, 2019.   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.  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.

Page 31

The 2017 Tax Act, among other things, reduces the federal statutory corporate tax rate for tax years beginning in 2018 from 34% to 21%, eliminates certain deductions, and eliminates bonus depreciation on qualified water and wastewater property.  This resulted in the remeasurement of the federal portion of the Company’s deferred taxes as of December 31, 2017 to the 21% rate.  The effect was recognized in income for the year ended December 31, 2017 for all deferred tax assets and liabilities except accelerated depreciation.  Under normalization rules applicable to public utility property included in the 2017 Tax Act, the excess accumulated deferred income taxes on accelerated depreciation is recorded as a regulatory liability.  The regulatory liability is a temporary difference, so a deferred tax asset is recorded including the gross-up of revenue necessary to return, in rates, the effect of the temporary difference.

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 2020 and 2019.  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.

Reclassifications

Certain 2019 amounts have been reclassified to conform to the 2020 presentation. This reclassification had no impact on the statements of income, the statement of common stockholders’ equity, or the statement of cash flows.

2.  Acquisitions

On August 29, 2019, the Company completed the acquisition of the wastewater collection assets of the Jacobus Borough Sewer Authority in York County, Pennsylvania.  The Company began operating the existing collection facilities on August 30, 2019.  The acquisition resulted in the addition of approximately 700 wastewater customers with purchase price and acquisition cost of approximately $2,112, which is less than the depreciated original cost of the assets.  The Company recorded a negative acquisition adjustment of approximately $271 and will seek approval from the PPUC to amortize the acquisition adjustment over the remaining life of the acquired assets.  This acquisition is immaterial to Company results.

On April 9, 2020, the Company completed the acquisition of the wastewater collection and treatment assets of Felton Borough in York County, Pennsylvania.  The Company began operating the existing collection and treatment facilities on April 16, 2020.  The acquisition resulted in the addition of approximately 130 wastewater customers with purchase price and acquisition costs of approximately $914, which is more than the depreciated original cost of the assets net of contributions in aid of construction.  The Company recorded an acquisition adjustment of $295 and will seek approval from the PPUC to amortize the acquisition adjustment over the remaining life of the acquired assets.  This acquisition is immaterial to Company results.

On September 14, 2020, the Company completed the acquisition of the wastewater collection and treatment assets and began operating the existing collection and treatment facilities of the Letterkenny Township Municipal Authority in Franklin County, Pennsylvania.  The acquisition resulted in the addition of approximately 180 wastewater customers with purchase price and acquisition costs of approximately $262 which is less than the depreciated original cost of the assets.  The Company recorded a negative acquisition adjustment of $751 and will seek approval from the PPUC to amortize the acquisition adjustment over the remaining life of the acquired assets.  This acquisition is immaterial to Company results.

Page 32

3.  Accounts Receivable and Contract Assets

Accounts receivable and contract assets are summarized in the following table:

	As of			As of
	Dec. 31, 2020			Dec. 31, 2019			Change
Accounts receivable – customers	$	5,633		$	4,574		$	1,059
Other receivables		206			152			54
		5,839			4,726			1,113
Less: allowance for doubtful accounts		(655	)		(305	)		(350	)
Accounts receivable, net	$	5,184		$	4,421		$	763
Unbilled revenue	$	2,847		$	2,276		$	571

Differences in timing of revenue recognition, billings, and cash collections result in receivables and contract assets.  Generally, billing occurs subsequent to revenue recognition, resulting in a contract asset reported as unbilled revenue on the balance sheet.  The Company does not receive advances or deposits from customers before revenue is recognized so no contract liabilities are reported.  Accounts receivable are recorded when the right to consideration becomes unconditional and are presented separately on the balance sheet.  The changes in accounts receivable – customers and in unbilled revenue were primarily due to normal timing difference between performance and the customer’s payments.  In 2020, a weakening in the timeliness of payments due to the COVID-19 pandemic increased the accounts receivable – customers.  This was considered in the review of the allowance for doubtful accounts resulting in the increase in the balance in 2020.

4.  Note Receivable and Customers’ Advances for Construction

The Company entered into an agreement with a municipality to extend water service into a previously formed water district.  The Company loaned funds to the municipality to cover the costs related to the project.  The municipality concurrently advanced these funds back to the Company in the form of customers’ advances for construction.  The municipality is required by enacted ordinance 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 that could be used to settle the note receivable are reduced periodically as operating revenues are earned by the Company from customers connected to the system and refunds of the advance are made.  There is no due date for the notes or expiration date for the advance.

The Company recorded interest income of $139 in 2020 and $121 in 2019.  The interest rate on the note outstanding is 7.5%.

Included in the accompanying balance sheets at December 31, 2020 and 2019 were the following amounts related to this project.

	2020		2019
Note receivable, including interest	$	255	$	255
Customers’ advances for construction		302		303

The Company has other customers’ advances for construction totaling $10,024 and $7,541 at December 31, 2020 and 2019, respectively.

Page 33

5.  Common Stock and Earnings Per Share

Net income of $16,598 and $14,402 for the years ended December 31, 2020 and 2019 respectively, is used to calculate both basic and diluted earnings per share.  Basic net income per share is based on the weighted average number of common shares outstanding.  Diluted net income per share is based on the weighted average number of common shares outstanding plus potentially dilutive shares.  The dilutive effect of employee stock-based compensation is included in the computation of diluted net income per share.  The dilutive effect of stock-based compensation is calculated using the treasury stock method and expected proceeds upon exercise or issuance of the stock-based compensation.

The following table summarizes the shares used in computing basic and diluted net income per share:

	2020		2019
Weighted average common shares, basic		13,033,681		12,964,080
Effect of dilutive securities:
Employee stock-based compensation		839		2,212
Weighted average common shares, diluted		13,034,520		12,966,292

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 2020 and 2019 were 3,718 and 3,914, respectively.  As of December 31, 2020, 58,007 authorized shares remain unissued under the plan.

The Company has a Dividend Reinvestment and Direct Stock Purchase and Sale Plan (“the Plan”), which is available to both current shareholders and the general public.  On November 8, 2019, the Company filed a Registration Statement on Form S-3 with the Securities and Exchange Commission (SEC) to authorize an additional 157,000 shares and rollover the unissued 344,379 shares authorized under the 2016 Form S-3, for issuance under the new Prospectus for the Plan.  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).  Under the direct stock purchase portion of the Plan, purchases are made monthly at 100% of the stock’s fair market value, as defined in the new Prospectus.  The Registration Statement was declared effective by the SEC on November 18, 2019.  Shares issued during 2020 and 2019 were 37,370 and 60,485, respectively.  As of December 31, 2020, 438,519 authorized shares remain unissued under the Plan.

On March 11, 2013, the Board of Directors, or the Board, 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.  The stock repurchase program has no specific end date and 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 both 2020 and 2019, the Company did not repurchase or retire any shares.  As of December 31, 2020, 618,004 shares remain available for repurchase.

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6.  Long-Term Debt and Short-Term Borrowings

Long-term debt as of December 31, 2020 and 2019 is summarized in the following table:

	2020			2019
10.05% Senior Notes, Series C, due 2020	$	–		$	6,500
8.43% Senior Notes, Series D, due 2022		7,500			7,500
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029		12,000			12,000
3.00% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series A of 2019, due 2036		10,500			10,500
3.10% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series B of 2019, due 2038		14,870			14,870
3.23% Senior Notes, 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			10,000
4.54% Senior Notes, due 2049		20,000			20,000
3.24% Senior Notes, due 2050		30,000			–
Committed Line of Credit, due 2022		6,700			7,672
Total long-term debt		126,570			104,042
Less discount on issuance of long-term debt		(181	)		(192	)
Less unamortized debt issuance costs		(2,816	)		(2,815	)
Less current maturities		–			(6,500	)
Long-term portion	$	123,573		$	94,535

Payments due by year as of December 31, 2020:

2021			2022			2023			2024			2025
	$	–		$	26,200		$	–		$	–		$	–

Payments due in 2022 include payback of the committed line of credit.  The committed line of credit is reviewed annually, and upon favorable outcome, would likely be extended for another year.  Payments due in 2022 also include potential payments of  $12,000 on the variable rate bonds (due 2029) which would only be payable if all bonds were tendered and could not be remarketed, or in the event the Company was unable to, or chose not to, renew the letter of credit backing the bonds.  There is currently no such indication of this happening.

Fixed Rate Long-Term Debt

On September 30, 2020, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $30,000 aggregate principal amount of the Company’s senior notes.  The senior notes bear interest at 3.24% per annum payable semiannually and mature on September 30, 2050.  The senior notes are unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting issuance costs, of approximately $29,838.  The net proceeds were used to refinance the $6,500 aggregate principal amount of the Company’s 10.05% Senior Notes, Series C, due September 30, 2020, to refinance line of credit borrowings incurred by the Company as interim financing for various capital projects, to fund acquisitions and for general corporate purposes.

On January 31, 2019, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $20,000 aggregate principal amount of the Company’s senior notes.  The senior notes bear interest at 4.54% per annum payable semiannually and mature on January 31, 2049.  The senior notes are unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting issuance costs, of approximately $19,820.  The net proceeds were used to refinance the $11,000 aggregate principal amount of the Company’s 10.17% Series A Senior Notes due February 1, 2019 and the 9.60% Series B Senior Notes due February 1, 2019, and to refinance line of credit borrowings incurred by the Company as interim financing for various capital projects of the Company.

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On October 1, 2019, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $15,000 aggregate principal amount of the Company’s senior notes.  The senior notes bear interest at 3.23% per annum payable semiannually and mature on October 1, 2040.  The senior notes are unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting issuance costs, of approximately $14,888.  The net proceeds were used to refinance the $15,000 aggregate principal amount of the Company’s 5.00% Monthly Senior Notes Series 2010A due October 1, 2040.

On October 8, 2019, the Pennsylvania Economic Development Financing Authority, or PEDFA, issued and sold $10,500 aggregate principal amount of PEDFA Exempt Facilities Revenue Refunding Bonds, Series A of 2019, or the Series A Bonds, and $14,870 aggregate principal amount of PEDFA Exempt Facilities Revenue Refunding Bonds, Series B of 2019, or the Series B Bonds, for the Company’s benefit pursuant to the terms of a trust indenture, dated as of September 1, 2019, between the PEDFA and Manufacturers and Traders Trust Company, as trustee.  The PEDFA then loaned the proceeds of the issuance and sale of the Series A and the Series B Bonds to the Company pursuant to a loan agreement dated as of September 1, 2019, between the Company and the PEDFA.  The Series A Bonds, and therefore the loan, bears interest at 3.00% per annum payable semiannually and the maturity date of the loan is October 1, 2036 subject to optional and mandatory redemption provisions.  The Series B Bonds, and therefore the loan, bears interest at 3.10% per annum payable semiannually and the maturity date of the loan is November 1, 2038 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 issuance costs, of approximately $25,049.  The net proceeds were used to refinance the $10,500 aggregate principal amount of the Company’s 4.75% York County Industrial Development Authority Revenue Bonds Series 2006 due October 1, 2036 and the $14,870 aggregate principal amount of the Company’s 4.50% PEDFA Exempt Facilities Revenue Refunding Bonds Series 2014 due November 1, 2038.

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 0.62% in 2020 and 1.50%  in 2019.  As of December 31, 2020 and 2019, the interest rate was 0.12% and 1.78%, 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, 2022.  It is reviewed annually for a potential extension of the expiration date.

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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 7 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 April 9, 2020, Standard & Poor’s affirmed the Company’s credit rating at A-, with a stable outlook and adequate liquidity.  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, 2020.  If a violation was triggered on December 31, 2020, the Company would have been required to pay the counterparty approximately $2,830.

The Company’s interest rate swap agreement provides that it pays 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 2.87% in 2020 and 1.84% in 2019.

As of December 31, 2020, there was a spread of 3 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 3.19% (including variable interest and swap payments).  As of December 31, 2019, there was a spread of 75 basis points which equated to an overall effective rate of 3.91% (including variable interest and swap payments).

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Line of Credit Borrowings

In 2020, the Company entered into an agreement for a $50,000 unsecured, committed line of credit maturing in September 2022 at an interest rate of LIBOR plus 1.05% with an unused commitment fee and an interest rate floor.  Simultaneously, the Company paid off and terminated all prior existing line of credit agreements.  As of December 31, 2019, the Company maintained unsecured lines of credit aggregating $41,500 with four banks.  The first line of credit, in the amount of $13,000, was a committed line of credit with a revolving 2-year maturity and carried an interest rate of LIBOR plus 1.20%. The Company had $3,672 outstanding under this line of credit as of December 31, 2019.  The second line of credit, in the amount of $11,000, was a committed line of credit and carried an interest rate of LIBOR plus 1.25%.  The third line of credit, in the amount of $7,500, was a committed line of credit and carried an interest rate of LIBOR plus 1.15%. The Company had $4,000 outstanding under this line of credit as of December 31, 2019. The fourth line of credit, in the amount of $10,000, was a committed line of credit and carried an interest rate of LIBOR plus 1.20%. Average borrowings outstanding under the lines of credit were $7,467 in 2020 and $5,070 in 2019. The average cost of borrowings under the lines of credit was 1.59% during 2020 and 3.47% during 2019. The weighted average interest rate on the line of credit borrowings was 1.30% as of December 31, 2020 and 2.92% as of December 31, 2019.

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 the Company’s acquisition of its 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, 2020, none of the earnings retained in the business are restricted under these provisions.  The Company’s debt is unsecured.

The Company’s line of credit requires 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, 2020, the Company was in compliance with these covenants.

7.  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, 2020	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,731	$2,731

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, 2020.  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, 2020.  The use of the Company’s credit quality resulted in a reduction in the swap liability of $99 as of December 31, 2020.  The fair value of the swap reflecting the Company’s credit quality as of December 31, 2019 is shown in the table below.

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Description	December 31, 2019	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,248	$2,248

The carrying amount of current assets and liabilities that are considered financial instruments approximates fair value as of the dates presented.  The Company’s total long-term debt, with a carrying value of $126,570 at December 31, 2020, and $104,042 at December 31, 2019, had an estimated fair value of approximately $151,000 and $115,000, 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 the letter of credit on the 2008 PEDFA Series A issue.

Customers’ advances for construction and note receivable have carrying values at December 31, 2020 of $10,326 and $255, respectively.  At December 31, 2019, customers’ advances for construction and note receivable had carrying values of $7,844 and $255, 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.

8.  Commitments

Based on its capital budget, the Company anticipates construction and acquisition expenditures for 2021 and 2022 of approximately $36,000 and $40,000, 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 line 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 and contributions.

The Company entered into a consent order agreement with the Pennsylvania Department of Environmental Protection in December 2016 after the Company determined it exceeded the action level for lead as established by the Lead and Copper Rule, or LCR, issued by the U.S. Environmental Protection Agency.  The Company did not have an exceedance in any subsequent compliance test.  Under the agreement, the Company committed to exceed the LCR replacement schedule by replacing all of the remaining known company-owned lead service lines withinfour years from the agreement.  The cost for these service line replacements was approximately $2,740 and $2,713 through December 31, 2020 and 2019, respectively, and is included in utility plant.  As of December 31, 2020, all known company-owned lead service lines have been replaced.  Any additional company-owned lead service lines that are discovered will be replaced but are not expected to have a material impact on the financial position of the Company.

The Company was granted approval by the PPUC, to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the agreement.  The tariff modification allows the Company to replace customer-owned service lines at its own initial cost.  The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period.  The cost for the customer-owned lead service line replacements was approximately $1,204 and $1,000 through December 31, 2020 and 2019, respectively, and is included as a regulatory asset.  Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $1,500.  This estimate is subject to adjustment as more facts become available.

As of December 31, 2020, approximately 33% of the Company’s full time employees are under union contract.  The current contract was ratified in October 2020 and expires on April 30, 2023.

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.

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9.  Revenue

The following table shows the Company’s revenues disaggregated by service and customer type.

	2020		2019
Water utility service:
Residential	$	33,987	$	32,118
Commercial and industrial		13,764		14,161
Fire protection		3,191		3,074
Wastewater utility service:
Residential		1,746		1,291
Commercial and industrial		304		280
Billing and revenue collection services		266		70
Collection services		15		52
Other revenue		23		13
Total Revenue from Contracts with Customers		53,296		51,059
Rents from regulated property		556		519
Total Operating Revenue	$	53,852	$	51,578

Utility Service

The Company provides utility service as a distinct and single performance obligation to each of its water and wastewater customers.  The transaction price is detailed in the tariff pursuant to an order by the PPUC and made publicly available.  There is no variable consideration and no free service, special rates, or subnormal charges to any customer.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of utility service through a stand-ready obligation to perform and the transfer of water or the collection of wastewater through a series of distinct transactions that are identical in nature and have the same pattern of transfer to the customer.  The Company uses an output method to recognize the utility service revenue over time.  The stand-ready obligation is recognized through the passage of time in the form of a fixed charge and the transfer of water or the collection of wastewater is recognized at a per unit rate based on the actual or estimated flow through the meter.  Each customer is invoiced every month and the invoice is due within twenty days.  The utility service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for the passage of time and the actual or estimated usage from the latest meter reading to the end of the accounting period.  The methodology is standardized and consistently applied to reduce bias and the need for judgment.

Billing and Revenue Collection Service

The Company provides billing and revenue collection service as distinct performance obligations to three municipalities within the service territory of the Company.  The municipalities provide wastewater service to their residents and the Company acts as the billing and revenue collection agent for the municipalities.  The transaction price is a fixed amount per bill prepared as established in the contract.  There is no variable consideration.  Due to the fact that both the billing performance obligation and the revenue collection performance obligation are materially complete by the end of the reporting period, the Company does not allocate the transaction price between the two performance obligations.  The performance obligations are satisfied at a point in time when the bills are sent as the municipalities receive all the benefits and bears all of the risk of non-collection at that time.  Each municipality is invoiced when the bills are complete and the invoice is due within thirty days.  The billing and revenue collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.

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Collection Service

The Company provides collection service as a distinct and single performance obligation to several municipalities within the service territory of the Company.  The municipalities provide wastewater service to their residents.  If those residents are delinquent in paying for their wastewater service, the municipalities request that the Company post for and shut off the supply of water to the premises of those residents.  When the resident is no longer delinquent, the Company will restore water service to the premises.  The transaction price for each posting, each shut off, and each restoration is a fixed amount as established in the contract.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied at a point in time when the posting, shut off, or restoration is completed as the municipalities receive all the benefits in the form of payment or no longer providing wastewater service.  Each municipality is invoiced periodically for the posting, shut offs, and restorations that have been completed since the last billing and the invoice is due within thirty days.  The collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for postings, shut offs, and restorations that have been completed from the last billing to the end of the accounting period.

Service Line Protection Plan

The Company provides service line protection as a distinct and single performance obligation to current water customers that choose to participate.  The transaction price is detailed in the plan’s terms and conditions and made publicly available.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of service line protection through a stand-ready obligation to perform.  The Company uses an output method to recognize the service line protection revenue over time.  The stand-ready obligation is recognized through the passage of time.  A customer has a choice to prepay for an entire year or to pay in advance each month.  The service line protection plan has no returns or extended warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no material performance obligations remain unsatisfied as of the end of the reporting period.

10.  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 30, 2018, and sought an annual increase in water rates of $6,399 and an annual increase in wastewater rates of $289.  Effective March 1, 2019, the PPUC authorized an increase in water rates designed to produce approximately $3,361 in additional annual revenues and an increase in wastewater rates designed to produce approximately $289 in additional annual revenues.

As part of a rate order approved by the PPUC, the Company has agreed to return $2,117 to customers as a reconcilable negative surcharge on their bills generated from March 2019 through February 2020 for the benefit of the lower tax rate effective January 1, 2018 resulting from the enactment of the Tax Cuts and Jobs Act of 2017, or 2017 Tax Act.  During the years ended December 31, 2020 and 2019, the Company increased its regulatory liability by reducing revenue by $1 and $325, respectively, including the gross-up of revenue necessary to return, in rates, the effect of this temporary tax difference, and reclassified $0 and $27, respectively, from excess accumulated deferred income taxes on accelerated depreciation recorded at December 31, 2017.  As of December 31, 2020 the Company returned $2,117 in negative surcharges to customers.

The PPUC permits water utilities to collect a distribution system improvement charge, or 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 DSIC reset to zero when the new base rates took effect March 1, 2019.  The DSIC provided revenues of $0 in 2020 and $249 in 2019.  The DSIC is subject to audit by the PPUC.

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11.  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, 2020 and 2019.  The measurement of assets and obligations of the plans is as of December 31, 2020 and 2019.

Obligations and Funded Status At December 31	2020			2019
Change in Benefit Obligation
Pension benefit obligation, beginning of year	$	47,530		$	41,511
Service cost		938			849
Interest cost		1,457			1,645
Actuarial loss		6,165			5,241
Benefit payments		(1,984	)		(1,716	)
Pension benefit obligation, end of year		54,106			47,530
Change in Plan Assets
Fair value of plan assets, beginning of year		49,349			40,624
Actual return on plan assets		6,650			8,141
Employer contributions		2,300			2,300
Benefits paid		(1,984	)		(1,716	)
Fair value of plan assets, end of year		56,315			49,349
Funded Status of Plans at End of Year	$	2,209		$	1,819

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 otherwise recorded in accumulated other comprehensive income as a regulatory asset.  Management believes these costs will be recovered in future rates charged to customers.  The asset for the funded status of the Company’s pension plans as of  December 31, 2020 and 2019 is recorded in “Prepaid pension cost” on its balance sheets.

In 2020, the plans recognized a significant actuarial loss.  The Company adopted the new mortality improvement scale (MP-2020) but recognized an 80 basis point decrease in the discount rate. In 2019, the plans recognized a significant actuarial loss.  The Company adopted the new mortality table (Pri-2012) and the new mortality improvement scale (MP-2019) but recognized a 100 basis point decrease in the discount rate.  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.

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

	2020			2019
Net gain (loss) arising during the period	$	2,713		$	(167	)
Recognized net actuarial loss		(370	)		(421	)
Recognized prior service credit		13			13
Total changes in regulatory asset during the year	$	2,356		$	(575	)

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:

	2020			2019
Net loss	$	10,497		$	8,154
Prior service credit		(63	)		(76	)
Regulatory asset	$	10,434		$	8,078

Components of net periodic benefit cost are as follows:

	2020			2019
Service cost	$	938		$	849
Interest cost		1,457			1,645
Expected return on plan assets		(3,198	)		(2,733	)
Amortization of loss		370			421
Amortization of prior service credit		(13	)		(13	)
Rate-regulated adjustment		2,746			2,131
Net periodic benefit cost	$	2,300		$	2,300

Pension service cost is recorded in operating expenses.  All other components of net periodic pension cost are recorded as other pension costs in other income (expenses).

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 2020, the deferral decreased by $2,746.

The estimated costs for the defined benefit pension plans relating to the December 31, 2020 balance sheet that will be amortized from regulatory assets into net periodic benefit cost over the next fiscal year are as follows:

Net loss	$	582
Net prior service credit		(13	)
	$	569

The Company plans to contribute $2,300 to the plans in 2021.

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:

2021			2022			2023			2024			2025				2026 – 2030
	$	1,903		$	1,984		$	2,163		$	2,224		$	2,216	$	12,472

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

	2020		2019
Projected benefit obligation	$	54,106	$	47,530
Fair value of plan assets		56,315		49,349

	2020		2019
Accumulated benefit obligation	$	50,578	$	44,587
Fair value of plan assets		56,315		49,349

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

	2020	2019
Discount rate	2.30%	3.10%
Rate of compensation increase	2.50% – 3.00%	2.50% – 3.00%

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

	2020	2019
Discount rate	3.10%	4.10%
Expected long-term return on plan assets	6.50%	6.50%
Rate of compensation increase	2.50% – 3.00%	2.50% – 3.00%

The selected long-term rate of return on plan assets was primarily based on the asset allocation of each 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.

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The fair values of the Company’s pension plan assets at December 31, 2020 and 2019 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	2020		2019		2020		2019		2020		2019
Cash and Money Market Funds (a)	$	624	$	682	$	624	$	682	$	–	$	–
Equity Securities:
Common Equity Securities (b)		–		662		–		662		–		–
Equity Mutual Funds (c)		35,707		29,677		35,707		29,677		–		–
Fixed Income Securities:
U.S. Treasury Obligations		631		615		–		–		631		615
Corporate and Foreign Bonds (d)		5,615		6,078		–		–		5,615		6,078
Fixed Income Mutual Funds (e)		13,738		11,635		13,738		11,635		–		–
Total Plan Assets	$	56,315	$	49,349	$	50,069	$	42,656	$	6,246	$	6,693

(a)	The portfolios are designed to keep up to one year of distributions in immediately available funds.
(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, telecommunications, industrials, real estate, materials, and energy.  The individual stocks are primarily large cap stocks which track with the S&P 500.
(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, energy, transportation, 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, 2020, 56 employees were participating in the enhanced feature of the plan.  The Company’s contributions to both portions of the plan amounted to $313 in 2020 and $300 in 2019.

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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, 2020 and 2019, the present value of the future obligations included in "Accrued compensation and benefits" and "Deferred employee benefits" was approximately $4,757 and $4,416, respectively.  The insurance policies included in "Other assets" had a total cash value of approximately $3,735 and $3,667 at December 31, 2020 and 2019, respectively.  The Company’s net expenses under the plans amounted to $585 in 2020 and $670 in 2019.

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, 2020 and 2019, the present value of the future obligations was approximately $165 and $137, 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 expenses under the plan amounted to $38 in 2020 and $34 in 2019.

12.  Stock-Based Compensation

On May 2, 2016, the Company’s stockholders approved The York Water Company Long-Term Incentive Plan, or LTIP.  The LTIP was adopted to provide the incentive of long-term stock-based awards to officers, directors and key employees. The LTIP provides for the granting of nonqualified stock options, incentive stock options, stock appreciation rights, performance restricted stock grants and units, restricted stock grants and units, and unrestricted stock grants.  A maximum of 100,000 shares of common stock may be issued under the LTIP over the ten-year life of the plan.  The maximum number of shares of common stock subject to awards that may be granted to any participant in any one calendar year is 2,000.  Shares of common stock issued under the LTIP may be treasury shares or authorized but unissued shares.  The LTIP is administered by the Compensation Committee of the Board, or the full Board, provided that the full Board administers the LTIP as it relates to awards to non-employee directors of the Company.  The Company filed a registration statement with the SEC on May 11, 2016 covering the offering of stock under the LTIP.  The LTIP was effective on July 1, 2016.

On November 21, 2016, the Board awarded stock to non-employee directors effective November 28, 2016.  This stock award vested immediately.  On the same date, the Compensation Committee awarded restricted stock to officers and key employees effective November 28, 2016.  This restricted stock award vested ratably over three years beginning November 28, 2016 and has been fully recognized as of December 31, 2019.

On April 26, 2017, the Board awarded stock to non-employee directors effective May 1, 2017.  This stock award vested immediately.  On April 26, 2017, the Compensation Committee awarded restricted stock to officers and key employees effective May 1, 2017.  This restricted stock award vested ratably over three years beginning May 1, 2017 and has been fully recognized as of December 31, 2020.

On May 7, 2018, the Board awarded stock to non-employee directors effective May 7, 2018.  This stock award vested immediately.  On May 7, 2018, the Compensation Committee awarded restricted stock to officers and key employees effective May 7, 2018.  This restricted stock award vests ratably over three years beginning May 7, 2018.

On November 20, 2018, the Board accelerated the vesting period for restricted stock granted in 2016, 2017, and 2018 to one retiring officer from three years to that officer’s 2019 retirement date and has been fully recognized as of December 31, 2019.

On May 6, 2019, the Board awarded stock to non-employee directors effective May 6, 2019.  This stock award vested immediately.  On May 6, 2019, the Compensation Committee awarded restricted stock to officers and key employees effective May 6, 2019.  This restricted stock award vests ratably over three years beginning May 6, 2019.

On August 19, 2019, the Board accelerated the vesting period for restricted stock granted in 2017, 2018, and 2019 to one retiring officer from three years to that officer’s 2020 retirement date and has been fully recognized as of December 31, 2020.

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On September 18, 2020, the Board awarded stock to non-employee directors effective September 18, 2020.  This stock award vested immediately.  On September 18, 2020, the Compensation Committee awarded restricted stock to officers and key employees effective September 18, 2020.  This restricted stock award vests ratably over three years beginning September 18, 2020.

The restricted stock awards provide the grantee with the rights of a shareholder, including the right to receive dividends and to vote such shares, but not the right to sell or otherwise transfer the shares during the restriction period.  As a result, the awards are included in common shares outstanding on the balance sheet.  Restricted stock awards result in compensation expense valued at the fair market value of the stock on the date of the grant and are amortized ratably over the restriction period.

The following table summarizes the stock grant amounts and activity for the years ended December 31, 2019 and 2020.

	Number of Shares	Grant Date Weighted Average Fair Value
Nonvested at beginning of the year 2019	3,080	$33.85
Granted	6,963	$33.61
Vested	(2,701)	$33.99
Forfeited	-	-
Nonvested at end of the year 2019	7,342	$33.57
Granted	4,912	$44.07
Vested	(5,491)	$36.00
Forfeited	(81)	$33.61
Nonvested at end of the year 2020	6,682	$39.30

For the years ended December 31, 2020 and 2019, the statement of income includes $154 and $166 of stock based compensation and related recognized tax benefits of $45 and $48, respectively.  The total fair value of the shares vested in the years ended December 31, 2020 and 2019 was $198 and $92, respectively.  Total stock based compensation related to nonvested awards not yet recognized is $263 at December 31, 2020 which will be recognized over the remaining three-year vesting period.

13.  Taxes Other than Income Taxes

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

	2020		2019
Regulatory Assessment	$	298	$	285
Property		353		348
Payroll, net of amounts capitalized		551		564
Other		3		3
Total taxes other than income taxes	$	1,205	$	1,200

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14.  Income Taxes

The provisions for income taxes consist of:

	2020			2019
Federal current	$	1,376		$	1,148
State current		554			451
Federal deferred		247			475
State deferred		(120	)		205
Federal investment tax credit, net of current utilization		(39	)		(39	)
Total income taxes	$	2,018		$	2,240

A reconciliation of the statutory Federal tax provision to the total provision follows:

	2020			2019
Statutory Federal tax provision	$	3,909		$	3,495
State income taxes, net of Federal benefit		426			574
IRS TPR deduction		(1,979	)		(1,642	)
Tax-exempt interest		(29	)		(25	)
Amortization of investment tax credit		(39	)		(39	)
Cash value of life insurance		(110	)		6
Amortization of excess accumulated deferred income taxes on accelerated depreciation		(182	)		(149	)
Other, net		22			20
Total income taxes	$	2,018		$	2,240

The Company filed for a change in accounting method under the IRS TPR effective in 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 for each year going forward (the “ongoing deduction”).  As a result of the catch-up deduction, income tax benefits of $3,887 were deferred as a regulatory liability.  After receiving approval from the PPUC in its most recent rate order, the Company began to recognize the catch-up deduction, recorded as a regulatory liability, over 15 years beginning March 1, 2019.  As a result, the Company recognized $259 and $216 in income taxes during the years ended December 31, 2020 and 2019, respectively.  As a result of the ongoing deduction, the net income tax benefits of $1,720 and $1,426 for the years ended  December 31, 2020 and 2019, 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 2017 Tax Act, among other things, reduces the federal statutory corporate tax rate for tax years beginning in 2018 from 34% to 21%, eliminates certain deductions, and eliminates bonus depreciation on qualified water and wastewater property.  This resulted in the remeasurement of the federal portion of the Company’s deferred taxes as of December 31, 2017 to the 21% rate.  The effect was recognized in income for the year ended December 31, 2017 for all deferred tax assets and liabilities except accelerated depreciation.  Under normalization rules applicable to public utility property included in the 2017 Tax Act, the excess accumulated deferred income taxes on accelerated depreciation is recorded as a regulatory liability.  The regulatory liability is a temporary difference so a deferred tax asset is recorded including the gross-up of revenue necessary to return, in rates, the effect of the temporary difference.  The Company is recognizing the excess accumulated deferred income taxes on accelerated depreciation, recorded as a regulatory liability, over the remaining useful life of the underlying assets.  As a result, the Company recognized $182 and $149 in income taxes during the years ended December 31, 2020 and 2019, respectively.

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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, 2020 and 2019 are summarized in the following table:

	2020		2019
Deferred tax assets:
Reserve for doubtful accounts	$	189	$	88
Compensated absences		151		148
Deferred compensation		1,375		1,276
Excess accumulated deferred income taxes on accelerated depreciation		3,995		4,047
Deferred taxes associated with the gross-up of revenues necessary to return, in rates, the effect of temporary differences		2,456		2,104
Customers’ advances for construction and contributions in aid of construction		1,815		998
Revenue reduction for tax rate change		–		7
Tax effect of pension regulatory liability		7		–
Other costs deducted for book, not for tax		64		69
Total deferred tax assets		10,052		8,737
Deferred tax liabilities:
Accelerated depreciation		29,893		28,891
Basis differences from IRS TPR		13,671		11,311
Investment tax credit		356		384
Deferred taxes associated with the gross-up of revenues necessary to recover, in rates, the effect of temporary differences		8,088		6,987
Pensions		638		525
Tax effect of pension regulatory asset		–		106
Unamortized debt issuance costs		500		531
Other costs deducted for tax, not for book		444		428
Total deferred tax liabilities		53,590		49,163
Net deferred tax liability	$	43,538	$	40,426

In accordance with accounting standards, the net deferred tax liability is classified as a noncurrent deferred income tax liability on the balance sheets.

No valuation allowance was required for deferred tax assets as of December 31, 2020 and 2019.  In assessing the value 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 2017 through 2019 for both federal and state income tax returns.  The Company has not yet filed tax returns for 2020. The Company believes that it has fully complied with any changes pursuant to the 2017 Tax Act and has not taken any new positions in its 2020 income tax provision.

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The Company’s policy is to recognize interest and penalties related to income tax matters in other expenses.  The Company paid no interest or penalties for the years ended December 31, 2020 and 2019, respectively.

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.

Management’s Report on Internal Control Over Financial Reporting

Management of 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, 2020.  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, 2020, the Company’s internal control over financial reporting was effective.

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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 2021 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 2021 Proxy Statement is incorporated herein by reference.

Code of Ethics

The information set forth under the caption “Code of Ethics” of the 2021 Proxy Statement is incorporated herein by reference.

Audit Committee

The information set forth under the caption “Board Committees and Functions” of the 2021 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 2021 Proxy Statement is incorporated herein by reference.

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

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information for the equity compensation plan of the Company as of December 31, 2020:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by security holders*	-	-	81,727
Equity compensation plans not approved by security holders	-	-	0

*Amounts are subject to adjustment to reflect stock dividends, stock splits, or other relevant changes in capitalization.

In addition, the Company has an employee stock purchase plan that allows employees to purchase stock at a 5% discount up to a maximum of 10% of their gross compensation.  Under this plan, 58,007 authorized shares remain unissued as of December 31, 2020.

The information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" of the 2021 Proxy Statement is incorporated herein by reference.

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

The information set forth under the caption “Director Independence” of the 2021 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 2021 Proxy Statement is incorporated herein by reference.

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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.

Report of Independent Registered Public Accounting Firm

Balance Sheets as of December 31, 2020 and 2019

Statements of Income for Years Ended December 31, 2020 and 2019

Statements of Common Stockholders’ Equity for Years Ended December 31, 2020 and 2019

Statements of Cash Flows for Years Ended December 31, 2020 and 2019

Notes to Financial Statements

2. Financial Statement schedules.

Schedule	Schedule	Page
Number	Description	Number
II	Valuation and Qualifying Accounts	58
	for the years ended December 31, 2020 and 2019

The report of the Company's independent registered public accounting firm with respect to the financial statement schedule appears on page 21.

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.

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.

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Exhibit Number	Exhibit Description	Page Number of Incorporation By Reference
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 November 8, 2019 (File No. 333-234587).
4.2	Description of The York Water Company Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended.	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 4.4 to the Company's 2019 Form 10-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 $6,500,000 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.
10.3	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.
10.4	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.
10.5	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.
10.6	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.
10.7	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.

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Exhibit Number	Exhibit Description	Page Number of Incorporation By Reference
10.8	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.
10.9*	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.
10.10*	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 Schedule 10.10	Filed herewith.
10.11*	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 Schedule 10.11	Filed herewith.
10.12*	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 Schedule 10.18	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.18 to the Company’s March 10, 2020 Form 10-K.
10.13*	Form of Amended and Restated Deferred Compensation Plan made as of January 1, 2016 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 Schedule 10.13	Filed herewith.
10.14*	Long-Term Incentive Plan	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission on Form S-8 dated May 11, 2016 (File No. 333-211287).
10.15*	Employee Stock Purchase Plan	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.21 to the Company's March 7, 2017 Form 10-K.

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Exhibit Number	Exhibit Description	Page Number of Incorporation By Reference
10.16	Note Agreement relative to the $20,000,000 4.54% Senior Notes, dated January 31, 2019	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.1 to the Company's February 5, 2019 Form 8-K.
10.17	Note Agreement relative to the $15,000,000 3.23% Senior Notes, dated October 1, 2019	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.1 to the Company’s October 2, 2019 Form 8-K.
10.18	Loan Agreement between The York Water Company and Pennsylvania Economic Development Financing Authority entered into October 8, 2019 and dated as of September 1, 2019 relative to the $25,370,000 3.00% - 3.10% 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 October 9, 2019 Form 8-K.
10.19	Trust Indenture entered into October 8, 2019 and dated as of September 1, 2019 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 October 9, 2019 Form 8-K.
10.20	Note Agreement relative to the $30,000,000 3.24% Senior Notes, dated September 30, 2020	Incorporated herein by reference.  Filed previously with the Securities and Exchange Commission as Exhibit 10.1 to the Company’s October 2, 2020 Form 8-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 US, 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.

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Exhibit Number	Exhibit Description	Page Number of Incorporation By Reference
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.
* Management contracts and compensatory plans or arrangements required to be filed as exhibits pursuant
to Item 15(a)(3) of this Annual Report.

Item 16. Form 10-K Summary.

None.

Page 57

THE YORK WATER COMPANY

Schedule II Valuation and Qualifying Accounts

For the Two Years Ended December 31, 2020

				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, 2020 Reserve for uncollectible accounts		$	305,000		$	613,556		$	54,653		$	318,209		$	655,000
For the Year Ended December 31, 2019 Reserve for uncollectible accounts		$	305,000		$	258,542		$	51,900		$	310,442		$	305,000

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

Page 58

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 8, 2021	By: /s/ Joseph T. Hand
	Joseph T. Hand
	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/ Joseph T. Hand	By: /s/ Matthew E. Poff
Joseph T. Hand	Matthew E. Poff
(Principal Executive Officer and Director)	(Principal Accounting Officer and Chief Financial Officer)
Dated: March 8, 2021	Dated: March 8, 2021
Directors:	Date:
By: /s/ Cynthia A. Dotzel	March 8, 2021
Cynthia A. Dotzel
By: /s/ Michael W. Gang	March 8, 2021
Michael W. Gang
By: /s/ Joseph T. Hand	March 8, 2021
Joseph T. Hand
By: /s/ Jeffrey R. Hines	March 8, 2021
Jeffrey R. Hines
By: /s/ George W. Hodges	March 8, 2021
George W. Hodges
By: /s/ George Hay Kain, III	March 8, 2021
George Hay Kain, III
By: /s/ Jody L. Keller	March 8, 2021
Jody L. Keller
By: /s/ Erin C. McGlaughlin	March 8, 2021
Erin C. McGlaughlin
By: /s/ Robert P. Newcomer	March 8, 2021
Robert P. Newcomer
By: /s/ Steven R. Rasmussen	March 8, 2021
Steven R. Rasmussen
By: /s/ Ernest J. Waters	March 8, 2021
Ernest J. Waters

Page 59

EX-10.10

Exhibit 10-10

AMENDED AND RESTATED

AGREEMENT

This Amended and RestatedAgreement (this “Agreement”) made as of ____________________, between The York Water Company, a Pennsylvania corporation (the “Company”), and ________________ (“Employee”).

WHEREAS, Employee is the ______________________ of the Company and devotes substantially all of his business time and efforts to the Company’s affairs;

WHEREAS, the Company recognizes that the departure or distraction of key management personnel would be detrimental to the business of the Company;

WHEREAS, the Board of Directors of the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the Company’s management to their assigned duties without distraction;

WHEREAS, in consideration of Employee’s continued employment with the Company and his agreement not to compete with the Company as set forth in this Agreement, the Company agrees that Employee shall receive the compensation set forth in this Agreement against the adverse financial and career impact on Employee if his employment with the Company is terminated under certain circumstances;

WHEREAS, the Company wishes to reward the dedication and loyalty of Employee by providing for certain bonus payments to be made to Employee based upon Employee’s tenure, the Company agrees that Employee shall receive the payments set forth in this Agreement upon the achievement of certain temporal milestones;

WHEREAS, the Company and Employee previously entered into this Agreement on ____________ (the “Prior Agreement”); and

WHEREAS, the parties now wish to amend and restate the Prior Agreement on the terms set forth herein to make this Agreement compliant with the applicable requirements of Section 409A of the Code (as defined below) and the regulations promulgated thereunder.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows:

1.Definitions.  For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires:

(a)“Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.

(b)A Person shall be deemed the “Beneficial Owner” of any securities: (i) that such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the “Beneficial Owner” of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation, pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall not be deemed the “Beneficial Owner” of any security under this clause (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person’s Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to clause (ii) above) or disposing of any voting securities of the Company; provided, however, that nothing in this Section 1(b) shall cause a Person engaged in business as an underwriter of securities to be the “Beneficial Owner” of any securities acquired through such Person’s participation in good faith in a firm commitment underwriting until the expiration of 40 days after the date of such acquisition.

(c)“Board” shall mean the Board of Directors of the Company.

(d)“Business Combination” shall mean a reorganization, merger or consolidation of the Company.

(e)“Cause” shall mean (i) misappropriation of funds or any act of common law fraud, (ii) habitual insobriety or substance abuse, (iii) conviction of a felony or any crime involving moral turpitude, (iv) willful misconduct or gross negligence by Employee in the performance of his duties, (v) the willful failure of Employee to perform a material function of Employee’s duties hereunder, or (vi) Employee engaging in a conflict of interest or other breach of fiduciary duty.

(f)“Change of Control” shall mean:

(i)Any Person (except Employee, his Affiliates and Associates, the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner in the aggregate of 50 percent or more of either (A) the Outstanding Company Common Stock or (B) the Company Voting Securities , in either case unless a majority of the members of the Board in office immediately prior to such acquisition determine within five business days of the receipt of actual notice of such acquisition that the circumstances do not warrant the implementation of the provisions of this Agreement;

(ii)The Incumbent Board ceases for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the beginning of such period whose election or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then constituting the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act);

(iii)Consummation by the Company of a Business Combination, in each case, with respect to which all or substantially all of the individuals and entities who were the respective Beneficial Owners of the Outstanding Company Common Stock and Company Voting Securities immediately prior to such Business Combination are not, following such Business Combination, Beneficial Owners, directly or indirectly, of more than 50 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination in substantially the same proportion as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Company Voting Securities, as the case may be, in any such case unless a majority of the members of the Board in office immediately prior to such Business Combination determines at the time of such Business Combination that the circumstances do not warrant the implementation of the provisions of this Agreement; or

(iv)(A) Consummation of a complete liquidation or dissolution of the Company or (B) sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, following such sale or disposition, individuals and entities that are the Beneficial Owners of more than 50 percent of, respectively, the Outstanding Company Common Stock and the Company Voting Securities are substantially the same as the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Common Stock and Company Voting Securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the Outstanding Company Common Stock and Company Voting Securities, as the case may be, immediately prior to such sale or disposition, in any such case unless a majority of the members of the Incumbent Board in office immediately prior to such sale or disposition determines at the time of such sale or disposition that the circumstances do not warrant the implementation of the provisions of this Agreement.

(g)“Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

(h)“Company Voting Securities” shall mean the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors.

(i)“Compensation” shall mean the sum of base compensation and annual bonus compensation payable in cash to Employee during the twelve months preceding any date of determination under this Agreement.

(j)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(k)“Good Reason Termination” shall mean a Termination of Employment initiated by Employee following a Change of Control and the occurrence of one or more of the following events, without the consent of Employee:

(i)any action or inaction that constitutes a material breach by the Company of this Agreement, including but not limited to a breach of Section 6 hereof;

(ii)any material reduction by the Company of the authority, duties or responsibilities of Employee’s principal assignment with the Company;

(iii) any material reduction in Employee's base compensation;

(iv)any removal by the Company of Employee from the employment grade or officer positions which Employee holds as of the effective date hereof except in connection with promotions to higher office; provided, however, that such removal results in a diminution in Employee's authority, duties or responsibilities; or

(v)a material change in the geographic location at which Employee must perform services; provided that a transfer of Employee to a location that is more than 50 miles from his principal place of business immediately preceding the Change of Control shall constitute a material change in the geographic location.

Notwithstanding the preceding definition of Good Reason Termination, Employee shall only have a Good Reason Termination for purposes of this Agreement if he provides written notice to the Company identifying the event or omission constituting the reason for the Good Reason Termination not more than 30 days following the occurrence of such event.  Within 30 days after notice has been provided, the Company shall have the opportunity, but shall have no obligation, to cure such events or conditions that give rise to the Good Reason Termination.  If the Company fails to cure the events or conditions giving rise to Employee’s Good Reason Termination, Employee must actually terminate within 60 days thereafter for the termination to be a Good Reason Termination.

(l)“Incumbent Board” shall mean those individuals who, as of any date of determination under the Agreement, are individuals who have constituted the Board during the preceding 12-month period.

(m)“Outstanding Company Common Stock” shall mean the then outstanding shares of common stock of the Company.

(n)“Person” shall mean any natural person, business trust, corporation, partnership, limited liability company, joint stock company, proprietorship, association, trust, joint venture, unincorporated association or any other legal entity of whatever nature.

(o)“Phase Out Date” shall mean the first day of the calendar month coincident with or next following Employee’s 65th birthday.

(p)“Subsidiary” shall mean any corporation in which the Company, directly or indirectly, owns at least a 50 percent interest or an unincorporated entity of which the Company, directly or indirectly, owns at least 50 percent of the profits or capital interests.

(q)“Termination Date” shall mean the date of Employee’s Termination of Employment.

(r)“Termination of Employment” shall mean Employee’s “separation from service” within the meaning of such term under Section 409A of the Code) with the Company.

2.Notice of Termination.  Any Termination of Employment shall be communicated by a Notice of Termination in accordance with Section 17 hereof. For purposes of this Agreement, a “Notice of Termination” means a written notice which, in the case of a Good Reason Termination by Employee (a) indicates the specific reasons for the termination, (b) briefly summarizes the facts and circumstances deemed to provide a basis for termination of Employee’s employment, and (c) if the Termination Date is other than the date of receipt of such notice, specifies the Termination Date (which date shall not be more than 15 days after the giving of such notice).

3.Severance Compensation upon Termination; Bonus Payments upon Certain Circumstances.

(a)In the event of (i) an involuntary Termination of Employment for any reason other than Cause or (ii) a Good Reason Termination, in either case within one year following a Change of Control or six months prior to a Change of Control, the Company shall pay to Employee, within 60 days after the later of the Termination Date or the date of the Change of Control, a single sum cash payment equal to _____ multiplied by Employee’s Compensation and on the first payroll date of the seventh month following Employee’s Termination Date with the Company, in accordance with the requirements set forth in Section 14(c), an additional single sum cash payment equal to one-fourth (25 percent) multiplied by Employee’s Compensation, both payments subject to Employee’s execution and non-revocation of a release in form and substance reasonably satisfactory to the Chairman of the Board and customary employment taxes and statutory deductions.

(b)In the event of Employee’s voluntary Termination of Employment for any reason other than a Good Reason Termination, within (i) three months after a Change of Control, Employee shall not be entitled to any payment; or (ii) three months and one day to 12 months following a Change of Control, the Company shall pay to Employee on the first payroll date of the seventh month following Employee’s Termination Date with the Company, in accordance with the requirements set forth in Section 14(c), subject to Employee’s execution and non-revocation of a release in form and substance reasonably satisfactory to the Chairman of the Board, a single sum cash payment equal to one-fourth (25 percent) of Employee’s Compensation, subject to customary employment taxes and statutory deductions.

(c)If on the date 12 months and one day following a Change of Control there has not been a Termination of Employment, then the Company shall pay to Employee, within 60 days after such date, a single sum in cash equal to one-half (50 percent) multiplied by Employee’s Compensation, subject to customary employment taxes and statutory deductions; provided that the foregoing amount shall only be paid if the transaction constituting a Change of Control hereunder also constitutes a “change in control event” as such term is defined in Section 409A of the Code.

(d)Notwithstanding paragraph (a) or (b) above and without regard to the fact that payment is to be made in a single sum, until the earlier of the Phase Out Date or 36 months after the Termination Date, Employee shall be entitled to continued coverage under the Company’s medical, dental and other welfare benefit plans at the same level of coverage (and required employee contributions, if any) as Employee was receiving at the time of his Termination Date, subject to the Company’s right to make changes to such plans for all of its executive level employees generally; provided, however, that this obligation of the Company shall cease upon Employee’s obtaining new employment that provides Employee with eligibility for comparable medical benefits without a pre-existing condition limitation; and, provided, further, that such extended coverage shall be in addition to, and not as a substitute for, Employee’s COBRA rights which shall apply at the end of such extended coverage.  All other benefit plan coverages, retirement benefit accruals and fringe benefit eligibility shall cease on the Termination Date subject to applicable rights under ERISA and COBRA.

4.Other Payments.  The payment due under Section 3 hereof shall be in addition to and not in lieu of any payments or benefits accrued for Employee through the Termination Date under any plan, policy or program of the Company, including the Supplemental Retirement Plan and the Deferred Compensation Agreement, except that no payments shall be due to Employee under any severance pay plan for the Company’s employees.

5.Enforcement.

(a)In the event that the Company shall fail or refuse to make payment of any amounts due Employee under Sections 3 and 4 hereof within the respective time periods provided therein, the Company shall pay to an escrow agent, who shall invest such sum with interest to be paid to the prevailing party, any amount remaining unpaid under Section 3 or 4.  In such event, the parties shall engage in arbitration in the City of Harrisburg, Pennsylvania, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association, before a panel of three arbitrators, one of whom shall be selected by the Company and one by Employee, and the third of whom shall be selected by the other two arbitrators.  Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction.  This arbitration provision shall be specifically enforceable.  The arbitrators shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of the Agreement.  The delayed payment will be treated as paid on the date specified under this Agreement if Employee accepts any portion of the payment that the Company is willing to make, Employee makes prompt and reasonable, good faith efforts to collect the remaining portion of the payment and the remainder of the payment is made no later than the end of the Company’s first taxable year in which the arbitrators reach a decision, the Company and Employee enter into a legally binding settlement of the dispute over the payment or the date the Company concedes the payment is due to Employee.  For Employee’s efforts to collect payment to be considered prompt, reasonable and in good faith, Employee must provide notice to the Company within 90 days of the latest date that payment could have been made in accordance with the terms of this Agreement and, if not paid, Employee must take further enforcement measures within 180 days after such date.

(b)The Company shall pay Employee on demand the amount necessary to reimburse Employee in full for all reasonable expenses (including reasonable attorneys’ fees and expenses) incurred by Employee in enforcing any of the obligations of the Company under this Agreement subject to Employee’s duty to repay such sums to the Company in the event that Employee does not prevail on any material issue which is the subject of such arbitration.  If Employee prevails on at least one material issue which is the subject of such arbitration, the Company shall be responsible for all of the fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration (including Employee’s reasonable attorneys’ fees and expenses).  Otherwise, each party shall be responsible for his or its own expenses relating to the conduct of the arbitration (including reasonable attorneys’ fees and expenses) and shall equally share the fees of the American Arbitration Association.  Any reimbursement or in-kind benefits under this Section 5 shall be paid or provided to Employee within 30 days of the date Employee is finally determined to have prevailed on at least one material issue, which was the subject of the arbitration.

6.Material Breach.  The parties agree that it shall constitute a material breach of this agreement by the Company if Employee’s annual bonus compensation opportunity is significantly reduced from the level effective as of the date the parties enter into this Agreement.

7.No Mitigation.  Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for herein be reduced by any compensation earned by other employment or otherwise.

8.Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or limit Employee’s continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any of its Subsidiaries or Affiliates and for which Employee may qualify, from the date hereof through the Termination Date.

9.No Set-Off.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against Employee or others.

10.Taxes.  Any payment required under this Agreement shall be subject to all requirements of law with regard to the withholding of taxes, filing, making of reports and the like, and the Company shall use its best efforts to satisfy promptly all such requirements.

11.Confidential Information.  Employee recognizes and acknowledges that, by reason of his employment by and service to the Company, he has had and will continue to have access to confidential information of the Company, including, without limitation, information and knowledge pertaining to products and services offered, innovations, designs, ideas, plans, trade secrets, proprietary information, distribution and sales methods and systems, sales and profit figures, customer and client lists, and relationships between the Company and its Subsidiaries and Affiliates and other distributors, customers, clients, suppliers and others who have business dealings with the Company (“Confidential Information”).  Employee acknowledges that such Confidential Information is a valuable and unique asset and covenants that he will not, either during or after his employment by the Company, disclose or use any such Confidential Information to any person for any reason whatsoever without the prior written authorization of the Board, unless such information is in the public domain through no fault of Employee or except as may be required by law.

12. Non-Competition.

(a)During his employment by the Company and for a period of one year thereafter, Employee will not, unless acting with the prior written consent of the Board, directly or indirectly, own, manage, operate, join, control, finance or participate in the ownership, management, operation, control or financing of, or be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise with or use or permit his name to be used in connection with, any business or enterprise engaged in by the Company or any of its Affiliates, either during his employment by the Company or on the Termination Date, as applicable, in the geographic area comprising the Company’s franchised service territory (the “Geographic Area”).  It is recognized by Employee that the business of the Company and its Affiliates and Employee’s connection therewith is or will be involved in activity throughout the Geographic Area, and that more limited geographical limitations on this non-competition covenant would not be appropriate.  Employee also shall not, directly or indirectly, during such one year period (a) solicit or attempt to convert any account or customer of the Company or its Affiliates existing on the Termination Date to another supplier, or (b) following Employee’s employment, solicit or attempt to hire any then employee of the Company or its Affiliates.

(b)The foregoing restriction shall not be construed to prohibit the ownership by Employee of less than five percent of any class of securities of any corporation which is engaged in any of the foregoing businesses having a class of securities registered pursuant to the Exchange Act, provided that such ownership represents a passive investment and that neither Employee nor any group of persons including Employee, either directly or indirectly, manages or exercises control of any such corporation, guarantees any of its financial obligations, otherwise takes any part in its business, other than exercising his rights as a shareholder, or seeks to do any of the foregoing.

13. Equitable Relief.

(a)Employee acknowledges that the restrictions contained in Sections 11 and 12 hereof are reasonable and necessary to protect the legitimate interests of the Company and its Affiliates, that the Company would not have entered into this Agreement in the absence of such restrictions, and that any violation of any provision of those Sections will result in irreparable injury to the Company.  Employee represents that his experience and capabilities are such that the restrictions contained in Section 12 hereof will not prevent Employee from obtaining employment or otherwise earning a living at the same general level of economic benefit as anticipated by this Agreement.  Employee further represents and acknowledges that (i) he has been advised by the Company to consult his own legal counsel in respect of this Agreement, and (ii) that he has had full opportunity, prior to execution of this Agreement, to review thoroughly this Agreement and understands its terms and conditions.

(b)Employee agrees that the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of Sections 11 or 12 hereof, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled.  In the event that any of the provisions of Sections 11 or 12 hereof should ever be adjudicated to exceed the time, geographic, service, or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, service, or other limitations permitted by applicable law.

(c)Employee irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising out of Section 11 or 12 hereof, including, without limitation, any action commenced by the Company for preliminary and permanent injunctive relief or other equitable relief, may be brought in the United States District Court for the Middle District of Pennsylvania, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in York County, Pennsylvania, consents to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii) waives any objection which Employee may have to the laying of venue of any such suit, action or proceeding in any such court.  Employee also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other papers in a manner permitted by the notice provisions of Section 17 hereof.

(d)Employee agrees that he will provide, and that the Company may similarly provide, a copy of Sections 11 and 12 hereof to any business or enterprise (i) which he may directly or indirectly own, manage, operate, finance, join, control or participate in the ownership, management, operation, financing, control or control of, or (ii) with which he may be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise, or in connection with which he may use or permit his name to be used; provided, however, that this provision shall not apply in respect of Section 13 hereof after expiration of the time period set forth therein.

14. Application of Section 409A.

(a)This Agreement is intended to comply with the applicable provisions of Section 409A of the Code and shall be interpreted to avoid any penalty sanctions under Section 409A of the Code.  If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under Section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed.  For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon Employee's “separation from service” (within the meaning of such termunder Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  In no event shall Employee, directly or indirectly, designate the calendar year of payment.

(b)All reimbursements and in kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement or in kind benefit is for expenses incurred during Employee’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement, or in kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in any other calendar year, (iii) the reimbursement or payment of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit.

(c)If, at the time of Employee’s termination of employment with the Company, the Company has securities which are publicly traded on an established securities market and Employee is a “specified employee” (as defined in Section 409A of the Code) and it is necessary to postpone the commencement of any payments or benefits otherwise payable pursuant to this Agreement as a result of such termination of employment to prevent any accelerated or additional tax under Section 409A of the Code, then the Company will postpone the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Employee) that are not otherwise paid within the short-term deferral exception under Treas. Reg. §1.409A-1(b)(4), and the separation pay exception under Treas. Reg. §1.409A-1(b)(9)(iii), until the first payroll date that occurs after the date that is six months following Employee’s separation of service with the Company.  If any payments or benefits are postponed due to such requirements, such amounts will be paid in a lump sum to Employee on the first payroll date that occurs after the date that is six months following Employee’s separation of service with the Company.  If Employee dies during the postponement period prior to the payment of the postponed amount, the amounts withheld on account of Section 409A of the Code shall be paid to the personal representative of Employee’s estate within 60 days after the date of Employee’s death.

15.Term of Agreement.  The term of this Agreement shall be for five years commencing on the date hereof and shall automatically be renewed for additional periods of one year until the Company notifies Employee in writing, at least 90 days in advance of expiration, that this Agreement will not be renewed.  If any notice of non-renewal occurs within two years after a Change of Control, such notice shall constitute an involuntary Termination of Employment for purposes of Section 3 above. Notwithstanding anything herein to the contrary, this Agreement (other than the provisions of Sections 11 through 12 hereof) shall terminate on the Phase-Out Date or if the employment of Employee by the Company shall terminate for any reason other than as provided herein.

16.Successor Company. The Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to Employee, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, the Company shall mean the Company as herein defined and any such successor or successors to its business and/or assets, jointly and severally.

17.Notice. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows:

If to the Company, to:

The York Water Company

130 East Market Street

York, PA  17405-7089

Attention:  Chairman of the Board

If to Employee, to:

____________________

____________________

____________________

or to such other names or addresses as the Company or Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal Service in the case of registered or certified mail, or on the next business day in the case of overnight express courier service.

18.Governing Law. This Agreement shall be governed by and interpreted under the laws of the Commonwealth of Pennsylvania without giving effect to any conflict of laws provisions.

19. Contents of Agreement, Amendment and Assignment.

(a)This Agreement supersedes all prior agreements, sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by Employee and the Company and only if approved by the Board. The provisions of this Agreement may provide for payments to Employee under certain compensation or bonus plans under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this Agreement without further action by the Company.

(b)Nothing in this Agreement shall be construed as giving Employee any right to be retained in the employ of the Company.

(c)All of the terms and provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Employee and the Company hereunder shall not be assignable in whole or in part.

20.Severability.  If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement, which can be given effect without the invalid or unenforceable provision or application.

21.Remedies Cumulative; No Waiver.  No right conferred upon Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity.  No delay or omission by Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof.

22.Miscellaneous. All section headings are for convenience only.  This Agreement may be executed in several counterparts, each of which is an original.  It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts.

23.Employee’s Acknowledgment. By executing this Agreement as of the date first above written, Employee acknowledges that he has no grounds for asserting that a Good Reason Termination exists as of that date and, therefore, that no obligation under Section 3 exists at the current time.

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written.

	THE YORK WATER COMPANY
By:
Witness	President and CEO
Witness	Employee

Schedule 10.10

Name	Original Agreement Date	Multiple of Base Pay for Involuntary Termination or Good Reason Termination
Joseph T. Hand	November 5, 2008	2.99
Vernon L. Bracey	December 15, 2003	.50
Mark S. Snyder	January 25, 2011	.50
Matthew E. Poff	February 9, 2018	.50
Natalee Colón	March 15, 2019	.50
Mark J. Hardman	March 15, 2019	.50
Mark A. Wheeler	September 16, 2019	.50
Alexandra C. Chiaruttini	October 13, 2020	.50

EX-10.11

Exhibit 10-11

The York Water Company

Amended and Restated

“Supplemental Retirement Plan”

(Effective January 1, 2009)

AMENDED AND RESTATED SUPPLEMENTAL RETIREMENT PLAN

THIS SUPPLEMENTAL RETIREMENT PLAN is an agreement (the “Agreement”) made as of this _______ day of _______________, 20___, by and between THE YORK WATER COMPANY, a Pennsylvania corporation with its principal business office located at 130 East Market Street, York, Pennsylvania (hereinafter called “Employer”) and ___________________ (hereinafter called “Employee”):

WITNESSETH:

WHEREAS, Employer wishes to encourage Employee's continued employment, and Employee is willing to undertake such employment, subject to receipt of deferred compensation upon the terms hereinafter set forth.

WHEREAS, Employer desires to amend and restate the Supplemental Retirement Plan to comply with the requirements of Section 409A of the Code (as defined below).

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, do hereby mutually agree as follows:

1.Employment.  Employer hereby engages Employee upon the terms and conditions as hereinafter provided.

2.Term.  This Agreement shall continue in full force and effect until the earlier of (i) Employee's Separation from Service (as defined below) prior to attaining age 55, or (ii) payment to Employee or Beneficiary, as applicable, of all benefits to which Employee shall become entitled hereunder.

3.Duties.  From and after the date hereof, Employee shall serve Employer in Employer's business in such capacity or capacities as may from time to time be determined by the President or Board of Directors of Employer (the “Board”).  During the period of active, full-time employment hereunder, Employee shall:

(a)devote his full time and best efforts to the business and affairs of Employer (allowing a reasonable time for vacation);

(b)perform such services, not unreasonable or inconsistent with Employee's position, education, training or background, as may be designated by the President or Board at any time and from time to time;

(c)use his best efforts to promote the business of Employer; and

(d)hold such office or directorship in Employer, to which Employee may from time to time be elected or appointed, without further compensation other than that for which provision is made in this Agreement.

4.Compensation.  During the period of Employee's employment hereunder, Employer agrees to pay Employee for his services such a salary as may from time to time be mutually agreed between Employer and Employee.

5.Definitions.  The following definitions are applicable to the benefits payable hereunder:

(a)Beneficiary shall mean one or more persons, trusts, estates or other entities that are entitled to receive benefits under this Agreement upon the death of Employee as may have theretofore been designated in writing by Employee on forms provided by Employer and containing Employer's acknowledgment or acceptance thereof.

(b)Code shall mean the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.

(c)Disability Retirement shall mean a condition of Employee 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 Employer.  Items (i) and (ii) in this Section 5(c) are permitted provided they are in compliance with the requirements of Treasury Regulations Section 1.409A-3(g)(4).   An Employee 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).

(d)Disability Retirement Benefit shall mean the benefit payable under this Agreement upon a Disability Retirement.  The Disability Retirement Benefit shall be the Monthly Retirement Benefit Unit multiplied by each calendar year of full-time, active service with Employer completed subsequent to the ________ and as of the December 31 immediately prior to Employee’s Disability Retirement.

(e)Early Retirement Age shall mean any age from and including age fifty-five (55) to and including age sixty-four (64).

(f)Early Retirement Benefit shall mean the Monthly Retirement Benefit Unit multiplied by each calendar year of full-time, active service with Employer completed subsequent to _________ and as of the December 31st immediately prior to attainment of Early Retirement Age.

(g)ERISA shall mean the Employee Retirement Income Act of 1974, as amended, and the regulations issued thereunder.

(h)Late Retirement Age shall mean any age from and including age sixty-six (66).

(i)Late Retirement Benefit shall mean the Monthly Retirement Benefit Unit multiplied by each calendar year of full-time, active service with Employer completed subsequent to _________ and as of the December 31st immediately prior to attainment of Late Retirement Age.

(j)Monthly Retirement Benefit Unit shall mean, for purposes of the applicable Supplemental Retirement Benefit determination hereunder, $_______, the monthly benefit unit commencing at Early Retirement Age, Normal Retirement Age, Late Retirement Age, Disability Retirement or Pre-Retirement Death, as applicable.

(k)Normal Retirement Age shall mean age sixty-five (65).

(l)Normal Retirement Benefit shall mean the Monthly Retirement Benefit Unit multiplied by each calendar year of full-time, active service with Employer completed subsequent to _________ and as of the December 31st immediately prior to attainment of Normal Retirement Age.

(m)Payment Delay for Specified Employees shall mean the six (6) month payment delay of the Normal Retirement Benefit that is payable to 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)) on account of the key employee’s Separation from Service.

(n)Plan Administrator shall mean the Board or its designee.

(o)Pre-Retirement Death Benefit shall mean the lesser of (x) the product of (i) $_________ per month indexed at four percent (4%) per annum, multiplied by (ii) the number of completed calendar years subsequent to ______________, or (y) the sum of (i) the product of (A) twelve (12) multiplied by (B) one hundred percent (100%) of monthly salary for the month in which death occurs and (2) the product of (A) one hundred sixty-eight (168) multiplied by (B) sixty percent (60%) of the monthly salary for the month in which death occurs.

(p)Separation from Service shall mean “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code.

(q)Supplemental Retirement Benefits shall mean Early Retirement Benefit, Normal Retirement Benefit, Late Retirement Benefit, Disability Retirement Benefit and the Pre-Retirement Death Benefit.

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

6.Supplemental Retirement Benefits

(a)  Retirement Benefits.  Subject to all of the terms and conditions hereof, Employer agrees to pay to Employee, and Employee shall be entitled to receive from Employer, his or her Early Retirement Benefit, Normal Retirement Benefit or Late Retirement Benefit, as applicable, upon the later of Employee’s (i) Separation from Service, provided Employee is at least age 55 at the time of such Separation from Service, or (ii) attainment of age sixty (60).  Employee’s Early Retirement Benefit, Normal Retirement Benefit or Late Retirement Benefit, as applicable, shall commence payment within sixty (60) days of Employee’s Separation from Service or Employee’s 60th birthday, as applicable, and be paid monthly for one hundred eighty (180) consecutive months thereafter .  Notwithstanding anything to the contrary in this Section 6(a), if Employee’s Early Retirement Benefit, Normal Retirement Benefit or Late Retirement Benefit, as applicable, is payable upon Employee’s Separation from Service and Employee is a key employee, the applicable retirement benefit is subject to the Payment Delay for Specified Employees.

(b)Disability Retirement Benefits.  If while actively employed on a full-time basis with Employer, Employee incurs a Disability Retirement, Employee is entitled to a Disability Retirement Benefit which shall commence payment within sixty (60) days following the Disability Retirement and be paid monthly until the December 31st immediately following Employee’s eightieth (80th) birthday.

(c)Pre-Retirement Death Benefits.  If Employee dies (i) while actively employed by Employer on a full-time basis and prior to the commencement of Normal Retirement Benefits or (ii) after satisfying the requirements of a Disability Retirement but prior to the commencement of Disability Retirement Benefits, the Pre-Retirement Death Benefit will be paid in a single lump sum within sixty (60) days following Employee’s death.

(d)Termination of Employment by Employee Prior to Age 55.  If Employee terminates employment by Employer prior to age fifty-five (55), other than as a result of death or Disability Retirement as provided for hereunder, Employee will no longer be entitled to receive benefits under this Agreement.

7.Eligibility in Other Employer Plans.  Nothing contained in this Agreement shall affect the right of Employee to participate or to continue to participate in any pension plan or in any other supplemental compensation arrangement sponsored by Employer which may constitute a part of Employer's regular compensation structure or in any discretionary bonus which Employer may pay to its employees; and Employee may receive the benefits under the provisions of any such pension plan or other arrangements in accordance with the terms thereof.  Any benefits paid to Employee pursuant to this Agreement shall not be deemed salary or other eligible compensation for the purpose of computing fringe benefits or benefits to which Employee may be entitled under any pension plan or other arrangement sponsored by Employer for the compensation of its employees.

8.Employee Revocable Designation.  In the event of death of Employee prior to the payment in full of the applicable benefits hereunder, Employee's remaining monthly payments shall be paid to Beneficiary at the same time and in the same form as if it were paid to Employee had Employee survived.  Employee shall have the right at any time and from time to time to change Beneficiary regardless of whether distribution of the benefits may have commenced.  In the event of Employee's failure to make such designation, or if no designee shall survive Employee, the remaining monthly payments shall be paid to Employee's spouse; provided that if Employee's spouse shall become entitled to payment hereunder, but shall die before payment in full of the applicable benefits, any remainder thereof shall be paid in monthly installments either to the issue of Employee, per stirpes, and if none, then to Employee's estate.

9.Unforeseeable Emergency.  Notwithstanding that an effective designation of a Beneficiary entitled to receive payment of benefits or remainder thereof may then be in force, the Board may, at its option, at any time or from time to time in its absolute and sole discretion, as permitted within the meaning of Section 409A of the Code and Treasury Regulations Section 1.409A-3(g)(3), accelerate the time and form of payment of any one or more payments hereunder in event of any Unforeseeable Emergency; provided that Employee is at least age 55 upon the occurrence of the Unforeseeable Emergency.

10.Minority or Disability.  If Employer in its sole discretion shall deem any person entitled to receive any payments under this Agreement to be unable to care for his or her affairs because of illness or accident, or is a minor, any such payments (unless a prior claim therefore shall have been made by a duly appointed guardian, committee or other legal representative) may be made to the spouse, child or children, parent, brother or sister of such person, or to any third person or entity deemed by Employer to have incurred expense for such person, in the manner and amount that such payments would have been distributed to such person.  Any such payment shall be a complete discharge to the extent thereof of the obligations of Employer under this Agreement.

11.Non-Alienation of Benefits.  None of the rights, interest or benefits contemplated under this Agreement may be sold, given away, assigned, transferred, pledged, mortgaged, alienated, hypothecated or in any way encumbered or disposed of by Employee, or any executor, administrator, heir, legatee, distributee, relative or any other person or entity, whether or not in being, claiming under Employee by virtue of this Agreement, and none of the rights, interest or benefits contemplated by this Agreement shall be subject to execution, attachment or similar process.  Any (or attempted) sale, gift, assignment, transfer, pledge, mortgage, alienation, hypothecation or encumbrance, or other disposition of this Agreement or of such rights, interest or benefits contrary to the foregoing provisions, or the levy or any attachment or similar process thereon, shall be null and void and without effect.

12.Discharge Provisions

(a)Notwithstanding anything which might be herein contained to the contrary, it being clearly understood and agreed upon by the parties hereto the EMPLOYMENT OF EMPLOYEE IS AND SHALL REMAIN EMPLOYMENT SOLELY AT-WILL, Employer may at any time discharge Employee, whether or not for cause, in which event or in the event Employee sues or in any manner contests such “at-will” employment or Employer's right to discharge Employee, then upon written notice to Employee and effective immediately upon the mailing thereof in the manner set forth in Section 19 hereof, Employee's right to receive benefits hereunder shall be fixed and determined as of such date; provided that nothing herein shall affect Employee's right to receive payment of such benefits in the manner and at the time herein provided, except as otherwise provided in Section 12(b) hereof.

(b)If Employee incurs a Separation from Service on account of termination of employment by Employer without cause and Employee is at least age 55, a monthly benefit paid for one hundred eighty (180) consecutive months will be paid commencing within sixty (60) days following the date of the discharged Employee's attainment of Normal Retirement Age, or if sooner, within sixty (60) days following the Employee’s death.  Notwithstanding the foregoing in this Section 12(b), if the benefit payable under this Section 12(b) is paid upon Employee’s Separation from Service and Employee is a key employee, then such payment is subject to the Payment Delay for Specified Employees.  The benefit paid under this Section 12(b) will be calculated using the then discounted  present value of the discharged Employee's Monthly Retirement Benefit Units accrued on Employer's books as of the December 31st immediately prior to the date when Employee's rights to receive a benefit is fixed under Section 12(a) hereof.  The monthly benefit will be determined assuming that the discounted present value is paid for one hundred eighty (180) consecutive equal monthly installments assuming interest at the same rate as used in determining the present value.  No Disability Retirement Benefits will be paid under this provision.

(c)In the event that Employee shall be convicted of a crime involving Employee's business affairs or in the event that Employer shall have reasonable cause to believe Employee to be guilty of any such crime, all rights of Employee under this Agreement shall terminate immediately, and Employer shall have the right to terminate and make no payments whatsoever of Supplemental Benefits hereunder, notwithstanding that such amounts would constitute all or a portion of the benefits otherwise payable hereunder.  Such right of Employer shall be in addition to, and not in lieu of, any and all other rights which Employer may have in such event.  The provisions hereof shall be applicable notwithstanding that payment of such Normal Retirement Benefit or Disability Retirement Benefits may have theretofore commenced under any provision of this Agreement.

13.Non-Competition Provision.  Notwithstanding anything herein contained to the contrary, no payment of any then unpaid installments of benefits under this Agreement shall be made and all rights under this Agreement of Employee, his spouse, executors or administrators, or other persons claiming through or on behalf of Employee to receive payments thereof, shall be forfeited, unless such forfeiture is waived by the Board, if Employee engages in or takes part in any business enterprise of any kind during employment by Employer or within a period of three (3) years after termination of such employment or at any time while Employee is receiving benefits hereunder for any reason whatsoever, within a sixty (60) mile radius of York, Pennsylvania, whether as an Employee or as an owner directly or indirectly, which manufacture, produces or sells any article then manufactured, produced or sold by Employer or by a present or future holding company of Employer or subsidiary of Employer or of such holding company, or which may be in any other way directly or indirectly competitive with the business of Employer or such holding company or subsidiary of Employer.

14.No Trust Relationship.  Nothing contained in this Agreement and no action taken pursuant to the provisions of this Agreement shall create or be construed to create a trust or security relationship of any kind, nor a fiduciary relationship between Employer and Employee, or any Beneficiary of the latter or other person presently or prospectively entitled to the receipt of payments hereunder.  To the extent that any person becomes entitled, presently or prospectively, to receive payments from Employer under this Agreement, such right shall be no greater than the right shall be no greater than the right of any unsecured general creditor of Employer.

15.Power and Authority.  Plan Administrator shall have full power and authority to interpret, construe and administer this Agreement, and any such interpretation or construction hereof by Plan Administrator, or other action hereunder, including the amount or recipient of any one or more payments of the benefits payable  hereunder, shall be binding and conclusive on all persons, whether in being or not.  Neither Employer nor Plan Administrator shall not be liable to any person, whether in being or not, for any action taken or omitted in connection with the interpretation and administration of this Agreement, unless attributable to the willful misconduct or bad faith of Employer or Plan Administrator, it being understood and agreed, however, that the employment of Employee is and shall continue to be solely at-will.

16.Waiver of Breach.  Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any right of power hereunder at any one time or more times be deemed a waiver or relinquishment of such right or power at any other time or times.

17.Modification.  This Agreement shall not be modified or amended except by written Agreement duly executed by Employee and Employer.

18.Severability.  If any clause, sentence, paragraph, section or part of this Agreement shall be held by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate any of the other parts hereof.

19.Notices.  Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and sent by registered or certified mail, if to Employee, to his address as shown on the books of Employer, and if to Employer, to the address shown above, or such other address as Employer may have designated in writing, or if such written notice is actually received by the person to whom sent.

20.Claims Procedure.

(a)Claim. Employee or Beneficiary (hereinafter referred to as a “Claimant”) who believes he or she is entitled to any Supplemental Retirement Benefit under this Agreement may file a claim with Plan Administrator. 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 Retirement Benefits), unless, for claims not involving Disability Retirement Benefits, the claimant receives written notice from Plan Administrator or appointee of 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 Retirement Benefits, Plan Administrator will notify the Claimant within the initial forty-five (45) day period that 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 Retirement Benefits, the Plan Administrator may notify the Claimant of an additional thirty (30) day extension.  If 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 Agreement 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 Retirement 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 Agreement’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 Plan Administrator within sixty (60) days after receiving notice of denial (one hundred eighty (180) days in the case of a claim involving Disability Retirement Benefits). The decision upon review will be made within sixty (60) days after Plan Administrator’s receipt of a request for review (forty-five (45) days in the case of a claim involving Disability Retirement 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 Retirement 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 Retirement 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 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, 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 Agreement 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 Agreement’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 Retirement 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 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 20(g) below, all interpretations, determinations and decisions of Plan Administrator in respect of any claim shall be made in its sole discretion based on the applicable Agreement 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 Agreement 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 Agreement to Follow Procedures. If the Agreement 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 Agreement 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 Agreement.

(g)Arbitration 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 Agreement 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 Employer 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 20(g), all determinations of the arbitrators in respect of any claim shall be final, conclusive and binding on all parties.

21.Gender and Plural.  All references made and pronouns used herein shall be construed in the singular or plural, and in such gender as the context may require.

22.Captions.  The captions of the various provisions shall not be deemed a part of this Agreement and shall not be construed in any way to limit the contents hereof but are inserted herein only for reference and for convenience of the parties.

23.Governing State Law.  This Agreement may be executed at different times in different places, but all questions concerning the construction or validity hereof, or relating to performance hereunder, shall be determined in accordance with the laws of the Commonwealth of Pennsylvania.

24.Duplicate Originals.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and there shall be no requirement to produce another counterpart.

25.Successors or Assigns.  It is hereby agreed that the terms and provisions of this Supplemental Retirement Plan shall be binding upon the successors or assigns of The York Water Company (Employer).

26.Section 409A Compliance. This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall in all respects be administered in accordance with Section 409A of the Code.  Notwithstanding anything in this Agreement to the contrary, distributions may only be made under this Agreement upon an event and in a manner permitted by Section 409A of the Code, including the requirement that “specified employees,” as such term is defined in Section 409A of the Code, may not receive distributions prior to the end of the six-month period following a Separation from Service.  If a payment is not made by the designated payment date under the Agreement, the payment shall be made by December 31 of the calendar year in which the designated date occurs.  To the extent that any provision of this Agreement would cause a conflict with the requirements of Section 409A of the Code, or would cause the administration of the Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law.  In no event may Employee designate the year of a distribution.   Notwithstanding anything in the Agreement to the contrary, this Agreement may be amended by Employer at any time, retroactively if required, to the extent required to conform the Agreement to Section 409A of the Code.

IN WITNESS WHEREOF, Employer has caused this Agreement to be executed by its duly authorized officers, and Employee has hereunto set his hand and seal as of the day and year first above written.

ATTEST:	THE YORK WATER COMPANY
_____________________________________	____________________________________
Secretary	President
	____________________________________
(SEAL)	Employee

TO WHOM IT MAY CONCERN

I designate the following as my beneficiary for the Supplemental Retirement Plan of The York Water Company.

Name of Beneficiary

Primary

Name

Address

Relationship

Secondary

Name

Address

Relationship

Signed

Date

Commonwealth of Pennsylvania	)
	)SS:
County of York	)

On this, the _______ day of _______________, 20___, before me a Notary Public, the undersigned personally appeared, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he or she executed the same for the purposes therein contained.

In Witness Whereof, I hereunto set my hand and official seal.

Notary Public

Schedule 10.11

Name	Date Credited Service Began	Date Credited Service Ended	Normal Monthly Retirement Unit	Pre-Retirement Death Benefit
Joseph T. Hand	December 31, 2019		401.50	800,000
Joseph T. Hand	December 31, 2009	December 31, 2019	163.40	-
Vernon L. Bracey	December 31, 2003		122.55	500,000
Mark S. Snyder	December 31, 2009		111.11	500,000
Matthew E. Poff	December 31, 2018		163.40	500,000
Natalee Colón	December 31, 2019		86.81	500,000
Mark J. Hardman	December 31, 2019		154.33	500,000
Mark A. Wheeler	December 31, 2020		151.52	300,000

EX-10.13

Exhibit 10-13

The York Water Company DEFERRED COMPENSATION PLAN

FOR EMPLOYEES INELIGIBLE FOR THE DEFINED BENEFIT PENSION PLAN

(Effective January 1, 2016)

RECITALS

THIS DEFERRED COMPENSATION PLAN (the “Plan”) is hereby adopted as of the 1st day of January, 2016, 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 adopt and establish 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, the Plan Sponsor shall permit otherwise eligible employees who are Participants in any other York Water Company deferred compensation plan to terminate their participation in said plan and become a Participant in this Plan, including Account Balances from the prior plan, the Deferred Compensation Plan for Employees not Eligible for a Defined Benefit Pension Plan.

WHEREAS, effective as of January 1, 2016, the Plan Sponsor 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 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 Percentage” shall mean that portion of a Participant’s Base Salary that a Participant elects to defer under the plan during any Plan Year. The Participant may elect to defer between zero (0) and five (5) percent of his or her Base Salary as of January 1 of each Plan Year. The annual deferral percentage may not be changed during the Plan Year.

1.4 “Annual Deferral Percentage Election” shall mean that annual percentage, between zero (0) percent and five (5) percent of the Participant’s base salary he or she elects to defer under the Plan in any given year. The Participant may make election changes for any subsequent plan year prior to the beginning of said year. Participant’s initial annual deferral amount election shall continue in each subsequent plan year unless, and until, the Participant changes his or her election.

1.5 “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.

1.6 “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.

1.7 “Board” shall mean the Board of Directors of Plan Sponsor.

1.8 “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.

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

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

1.11 “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).

1.12 “Effective Date” of the Plan is January 1, 2016.

1.13 “Election Form” shall mean the form or forms established from time to time by the Plan Administrator on which the Participant 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 the Participant designates his or her Beneficiary, as required on that form and under the terms of the Plan.

1.14 “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, but in no case will an employee become eligible prior to one (1) complete year of service.

1.15 “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.

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

1.17 “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.

1.18 “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.

1.19 “Participation Agreement” shall mean the document executed by the Eligible Employee and Plan Administrator whereby the Eligible Employee agrees to participate in the Plan.

1.20 “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).

1.21 “Plan” shall mean The York Water Company Deferred Compensation Plan For Employees Ineligible for the Defined Benefit Pension Plan, as set forth herein and amended from time to time.

1.22 “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.

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

1.24 “Plan Sponsor Contribution” shall mean the amount contributed to a Participant’s Plan Sponsor Contribution Account pursuant to Section 3.1 and 3.2.

1.25 “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.

1.26 “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.

1.27 “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 Sections 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).

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

1.29 “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.

1.30 “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.

1.31 “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.

1.32 “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.

1.33 “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.

1.34 “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.

1.35 “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

2.1 Selection 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.

2.2 Re-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.

2.3 Enrollment 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).

2.4 Plan 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.

2.5 Termination 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

3.1 Plan 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.

3.2 Plan Sponsor Non-Discretionary Contributions The Plan Sponsor shall make a non-discretionary contribution/match equal to, but not to exceed, 5% of the Participant’s base salary, Section 1.5.

3.3 Account 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. In no case shall the Plan Sponsor credit interest of more than a six (6) percent rate in any plan year to the Participant’s Plan Sponsor Contribution Account and the Participant’s Separation from Service Account. No interest shall be credited to any Participant’s account(s) after a Separation from Service.

3.4 Contributions and Account Earnings after Age 65  The Participant may not make any contributions to any Account after obtaining the age of 65 and actively employed by the Plan Sponsor.  The Plan Sponsor may not make any non-discretionary contributions to any of the Participant’s accounts after the Participant obtains the age of sixty-five (65). The Plan sponsor may not credit any of the Participant’s accounts with any interest after the Participant obtains the age of sixty-five (65).

ARTICLE 4.

Vesting and Taxes

4.1 Vesting of Benefits.

(a) A Participant shall be 100% vested in his or her Separation from Service Account, Section 1.30 at all times.

(b) A Participant shall be 100% vested in Plan Sponsor Contribution Account, Section 1.25 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) 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(e) 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).

4.2 FICA, 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) and (d), 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

5.1 Payment 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 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.

5.2 Payment 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) 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 1.31 such payment shall instead be made or commence six (6) months after the Participant’s Separation from Service.

5.3 Payment 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 1.31 such payment shall instead be made or commence six (6) months after the Participant’s Separation from Service.

5.4 Payment 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 1.31 such payment shall instead be made or commence six (6) months after the Participant’s Separation from Service.

5.5 Payment 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 1.31 such payment shall instead be made or commence six (6) months after the Participant’s Separation from Service.

5.6 Payment 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.

5.7 Payment 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).

5.8 Payment 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.

5.9 Method 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 fity thousand dollars ($50,000.00) 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.

5.10 No 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 $50,000.

(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.

5.11 Unsecured 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.

5.12 Facility 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.

5.13 Excise 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.

5.14 Delay 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.

5.15 Permissible Payment Event Calculation.

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 240.

The Participant may request the benefit be paid over a fifteen (15) year period (180 equal payments) instead of the benefit being paid over a twenty (20) year period (240 equal payments) which is the default payment schedule. The Participant must make a written request to the Plan Sponsor no less than three (3) months prior to receiving the first payment of the benefit.

Example Without Tax Savings:

Scheduled Withdrawal Account Value at age 60 =$500,000 (Participant Separated from Service Prior to vesting  of Tax Saving Multiplier)

Step 1: Actual Benefit to be paid each year: $500,000/20 years = $25,000 Step 2: Actual Benefit to be paid each month: $500,000/240 = $2,083.34

(b)The Plan Sponsor agrees that in determining the benefits payable under Sections 5.1, 5.4, 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 240 and then increasing the amount by the amount of federal and state income tax saved by the Plan Sponsor, if any. The savings will be calculated based on the marginal federal and state income tax bracket for the Plan Sponsor at the time the Participant initially enters the Plan.

Example With Tax Savings:

Scheduled Withdrawal Account Value at age 60 = $500,000 Corporate Marginal Tax Rate is 0.4059. Participant Separated at 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 $500,000 divided by .5941 =

$841,609.16)

Step 3:Actual Benefit to be paid each year: $841,609.16/20 years =

$42,080.45

Step 4: Actual Benefit to be paid each month: $841,609.16/240=$3,506.70 Beneficiary Designation

5.16 Designation 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.

5.17 Information 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 6.

Termination, Amendment or Modification

6.1 Plan 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.]

6.2 Amendment.  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 7.

Administration

7.1 Plan 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.

7.2 Plan 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.

7.3 Binding 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.

7.4 Compensation, 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.

7.5 Plan 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.

7.6 Periodic 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 8.

Claims Procedures

8.1 Claims 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.

8.2 Arbitration 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 9.

The Trust

9.1 Establishment 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.

9.2 Interrelationship 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.

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

ARTICLE 10.

Miscellaneous

10.1 Validity. 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.

10.2 Nonassignability. 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.

10.3 Not 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.

10.4 Governing 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.

10.5 Notice. 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.

10.6 Coordination 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.

10.7 Compliance. 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.

10.8 Successor 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.

10.9 Section 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)

PLAN ENROLLMENT KIT

for the

The York Water Company

Deferred Compensation Plan For Employees Ineligible For A Defined Benefit Pension Plan

Contents:

Participant Data Participation Agreement

Plan Year Initial 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 For Employees Ineligible For A Defined Benefit Pension 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)

DEFERRED COMPENSATION PLAN FOR EMPLOYEES INELIGIBLE FOR A DEFINED BENEFIT 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 Deferred Compensation Plan For Employees Not Eligible For A Defined Benefit Pension 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 Deferred Compensation Plan For Employees Not Eligible For A Defined Benefit Pension 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 and Tax Savings (if any) 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 For Employees Not Eligible For a Defined Benefit Pension 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 during a Plan Year.  I understand that my election will continue until, and unless, I change my election in accordance to the provisions of the Plan. All capitalized terms used herein are defined in the The York Water Company Deferred Compensation Plan For Employees Not Eligible For a Defined Benefit Pension Plan, unless otherwise indicated by the context.

◻ I elect to deferpercent of my Base Salary as of the beginning of each Plan Year until I elect a different deferral percentage in accordance with the provisions of the Plan.

I understand that the Company will contribute a percentage equal to my deferral election, not to exceed 5.0%, in accordance pursuant to section 3.2.

SECTION II: MARGINAL FEDERAL AND STATE TAX RATE

The marginal federal and state tax rate for the term of this contract shall be.

SECTION III:  DISTRIBUTION ELECTION

◻ I hereby elect that following my Separation From Service my vested benefit be paid to me, unless prohibited by 409a regulations, in one hundred and eighty (180) equal monthly payments beginning at the later of age 60 or my Separation From Service date.

◻ I hereby elect that following my Separation From Service my vested benefit be paid to me, unless prohibited by 409a regulations, in two-hundred and forty (240) equal monthly payments beginning at the later of age 60 or my Separation From Service date.

I understand that distribution election changes must be made more than twelve (12) months in advance of the initial distribution date.

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

SECTION IV:  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 10.13

Name	Marginal Federal and State Tax Rate
Natalee Colón	0.4059
Mark A. Wheeler	0.2889

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements on Form S-3 (File No. 333-234587) and Forms S-8 (File Nos. 333-191497 and 333-211287) of The York Water Company of our report dated March 9, 2021, relating to the financial statements and the financial statement schedule, which appear in this Form 10-K.

/s/ Baker Tilly US, LLP (formerly Baker Tilly Virchow Krause, LLP)

York, Pennsylvania

March 9, 2021

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Joseph T. Hand, 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 9, 2021	/s/ Joseph T. Hand
	Joseph T. Hand
	President and CEO

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Matthew E. Poff, 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 9, 2021	/s/ Matthew E. Poff
	Matthew E. Poff
	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, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Joseph T. Hand, 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/ Joseph T. Hand
	Joseph T. Hand
	Chief Executive Officer
Date: March 9, 2021

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, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Matthew E. Poff, 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/ Matthew E. Poff
	Matthew E. Poff
	Chief Financial Officer
Date: March 9, 2021

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2020	Mar. 09, 2021	Jun. 30, 2020
Cover [Abstract]
Entity Registrant Name	YORK WATER CO
Entity Central Index Key	0000108985
Current Fiscal Year End Date	--12-31
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Entity Address, State or Province	PA
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 625,110,599
Entity Common Stock, Shares Outstanding		13,063,448

XML

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
ASSETS
UTILITY PLANT, at original cost	$ 438,670	$ 401,383
Plant acquisition adjustments	(3,707)	(3,318)
Accumulated depreciation	(91,340)	(84,841)
Net utility plant	343,623	313,224
OTHER PHYSICAL PROPERTY, net of accumulated depreciation of $458 in 2020 and $435 in 2019	742	769
CURRENT ASSETS:
Cash and cash equivalents	2	2
Restricted cash	5,000	0
Accounts receivable, net of reserves of $655 in 2020 and $305 in 2019	5,184	4,421
Unbilled revenues	2,847	2,276
Recoverable income taxes	721	547
Materials and supplies inventories, at cost	1,010	1,007
Prepaid expenses	1,526	1,131
Total current assets	16,290	9,384
OTHER LONG-TERM ASSETS:
Prepaid pension cost	2,209	1,819
Note receivable	255	255
Deferred regulatory assets	39,893	34,189
Other assets	3,945	3,889
Total other long-term assets	46,302	40,152
Total Assets	406,957	363,529
COMMON STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 13,060,817 shares in 2020 and 13,014,898 shares in 2019	85,935	83,976
Retained earnings	57,317	50,209
Total common stockholders' equity	143,252	134,185
PREFERRED STOCK, authorized 500,000 shares, no shares issued	0	0
LONG-TERM DEBT, excluding current portion	123,573	94,535
COMMITMENTS
CURRENT LIABILITIES:
Current portion of long-term debt	0	6,500
Accounts payable	6,540	3,452
Dividends payable	2,192	2,096
Accrued compensation and benefits	1,417	1,247
Accrued interest	959	914
Deferred regulatory liabilities	525	609
Other accrued expenses	360	338
Total current liabilities	11,993	15,156
DEFERRED CREDITS:
Customers' advances for construction	10,326	7,844
Deferred income taxes	43,538	40,426
Deferred employee benefits	4,793	4,317
Deferred regulatory liabilities	25,444	24,790
Other deferred credits	2,731	2,247
Total deferred credits	86,832	79,624
Contributions in aid of construction	41,307	40,029
Total Stockholders' Equity and Liabilities	$ 406,957	$ 363,529

XML

Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
ASSETS
Other physical property, accumulated depreciation	$ 458	$ 435
CURRENT ASSETS:
Accounts receivables, reserves	$ 655	$ 305
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)	13,060,817	13,014,898
Common stock, outstanding (in shares)	13,060,817	13,014,898
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, 2020	Dec. 31, 2019
Statements of Income [Abstract]
OPERATING REVENUES	$ 53,852	$ 51,578
OPERATING EXPENSES:
Operation and maintenance	10,781	10,387
Administrative and general	9,258	8,517
Depreciation and amortization	8,177	7,688
Taxes other than income taxes	1,205	1,200
Operating expenses	29,421	27,792
Operating income	24,431	23,786
OTHER INCOME (EXPENSES):
Interest on debt	(4,707)	(5,124)
Allowance for funds used during construction	530	366
Other pension costs	(1,362)	(1,451)
Gain on life insurance	515	0
Other income (expenses), net	(791)	(935)
Other income (expenses)	(5,815)	(7,144)
Income before income taxes	18,616	16,642
Income taxes	2,018	2,240
Net Income	$ 16,598	$ 14,402
Basic Earnings Per Share (in dollars per share)	$ 1.27	$ 1.11
Diluted Earnings Per Share (in dollars per share)	$ 1.27	$ 1.11

XML

Statements of Common Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2018	$ 81,305	$ 44,890	$ 126,195
Balance (in shares) at Dec. 31, 2018	12,943,536
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 0	14,402	14,402
Cash dividends declared	0	(9,083)	(9,083)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans	$ 2,505	0	2,505
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans (in shares)	64,399
Stock-based compensation	$ 166	0	166
Stock-based compensation (in shares)	6,963
Balance at Dec. 31, 2019	$ 83,976	50,209	$ 134,185
Balance (in shares) at Dec. 31, 2019	13,014,898		13,014,898
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 0	16,598	$ 16,598
Cash dividends declared	0	(9,490)	(9,490)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans	$ 1,805	0	1,805
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans (in shares)	41,088
Stock-based compensation	$ 154	0	154
Stock-based compensation (in shares)	4,831
Balance at Dec. 31, 2020	$ 85,935	$ 57,317	$ 143,252
Balance (in shares) at Dec. 31, 2020	13,060,817		13,060,817

XML

Statements of Common Stockholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared (in dollars per share)	$ 0.7280	$ 0.7001

XML

Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 16,598	$ 14,402
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on life insurance	(515)	0
Depreciation and amortization	8,177	7,688
Stock-based compensation	154	166
Increase in deferred income taxes	88	641
Other	552	251
Changes in assets and liabilities:
(Increase) decrease in accounts receivable and unbilled revenues	(1,948)	282
Increase in recoverable income taxes	(174)	(547)
Increase in materials and supplies, prepaid expenses, prepaid pension cost, regulatory and other assets	(8,205)	(5,903)
Increase in accounts payable, accrued compensation and benefits, accrued expenses, deferred employee benefits, regulatory liabilities, and other deferred credits	5,463	2,129
Increase (decrease) in accrued interest and taxes	45	(228)
Net cash provided by operating activities	20,235	18,881
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions, including debt portion of allowance for funds used during construction of $296 in 2020 and $205 in 2019	(32,123)	(18,425)
Acquisitions of wastewater systems	(1,176)	(2,112)
Cash received from surrender of life insurance policies	672	0
Net cash used in investing activities	(32,627)	(20,537)
CASH FLOWS FROM FINANCING ACTIVITIES:
Customers' advances for construction and contributions in aid of construction	3,155	1,695
Repayments of customer advances	(419)	(396)
Proceeds of long-term debt issues	62,156	94,043
Debt issuance costs	(162)	(613)
Repayments of long-term debt	(39,628)	(85,906)
Repayments under short-term line of credit agreements	0	(1,000)
Changes in cash overdraft position	(121)	314
Issuance of common stock	1,805	2,505
Dividends paid	(9,394)	(8,986)
Net cash provided by financing activities	17,392	1,656
Net change in cash, cash equivalents, and restricted cash	5,000	0
Cash, cash equivalents, and restricted cash at beginning of period	2	2
Cash, cash equivalents, and restricted cash at end of period	5,002	2
Cash paid during the period for:
Interest, net of amounts capitalized	4,180	4,821
Income taxes	$ 2,429	$ 2,230
Supplemental schedule of non-cash investing and financing activities:
Accounts payable includes $3,022 in 2020 and $1,029 in 2019 for the construction of utility plant
Contributions in aid of construction includes $1,024 recorded as part of the Felton Borough acquisition.
Reconciliation of cash, cash equivalents, and restricted cash reported in the Balance Sheets
Cash and cash equivalents	$ 2	$ 2
Restricted cash	5,000	0
Cash, cash equivalents, and restricted cash at end of period	$ 5,002	$ 2

XML

Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions, debt portion of allowance for funds used during construction	$ 296	$ 205
Supplemental schedule of non-cash investing and financing activities:
Accounts payable for construction of utility plant	3,022	$ 1,029
Contributions in aid of construction recorded as part of the Felton Borough acquisition	$ 1,024

XML

Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Significant Accounting Policies [Abstract]

Significant Accounting Policies

1.  Significant Accounting Policies

The primary business of The York Water Company, or the Company, is to impound, purify and distribute water.  The Company also owns and operates two wastewater collection systems and five wastewater collection and treatment systems.  The Company operates within its franchised territory located in three counties within south-central 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, 2020 and 2019, utility plant includes a net credit acquisition adjustment of $3,707 and $3,318, 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 $67 and $61 for the years ended December 31, 2020 and 2019, respectively.

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	2020		2019		of remaining lives
Mains and accessories	$	212,164	$	200,954	10 – 86 years
Services, meters and hydrants		80,590		77,501	17 – 51 years
Operations structures, reservoirs and water tanks		65,617		63,530	9 – 58 years
Pumping and treatment equipment		34,163		33,124	6 – 30 years
Office, transportation and operating equipment		15,520		14,464	3 – 22 years
Land and other non-depreciable assets		3,478		3,393	–
Utility plant in service		411,532		392,966
Construction work in progress		27,138		8,417	–
Total Utility Plant	$	438,670	$	401,383

The effective rate of depreciation was 2.33% in 2020 and 2.29% in 2019, 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 an original 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 considers any cash account that it cannot access on demand due to contractual or legal reasons to be restricted cash.

At December 31, 2020, the Company held $5,000 in restricted cash which was a bid deposit held in escrow for a potential acquisition.  At December 31, 2019, the Company held no restricted cash.

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.

Materials and Supplies Inventories

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

Note Receivable

Note receivable is recorded at cost and represents amounts due from a municipality for construction of water mains in their 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
	2020		2019		Periods
Assets
Income taxes	$	28,200	$	24,405	Various
Postretirement benefits		–		365	-
Unrealized swap losses		2,700		2,227	1 – 9 years
Utility plant retirement costs		5,968		5,012	5 years
Customer-owned lead service line replacements		1,081		944	Various
Income taxes on customers’ advances for construction and contributions in aid of construction		1,815		998	Various
Service life study expenses		8		13	2 years
Rate case filing expenses		121		225	1 year
	$	39,893	$	34,189
Liabilities
Excess accumulated deferred income taxes on accelerated depreciation	$	13,826	$	14,008	Various
Income taxes		8,706		7,494	Various
IRS TPR catch-up deduction		3,412		3,671	13 years
Postretirement benefits		25		–	Not yet known
Revenue reduction for tax rate change		–		226	-
	$	25,969	$	25,399

The regulatory asset for income taxes includes (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.

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 term of 9 years.

Utility plant retirement costs represents costs already incurred for the removal of assets, which are expected to be recovered over a five-year period in rates, through depreciation expense.

The Company was granted approval by the PPUC to modify its tariff to replace lead customer-owned service lines that are discovered when the Company replaces its lead service lines over the remaining three years, and to include the cost of the annual replacement of up to 400 lead customer-owned service lines whenever they are discovered, regardless of the material used for the company-owned service line over nine years.  The tariff modification allows the Company to replace customer-owned service lines at its own initial cost and record the costs as a regulatory asset to be recovered in future base rates to customers.  The recovery period was established in the most recent rate order at four years beginning March 1, 2019.  The recovery period for the customer-owned lead service line replacements completed subsequent to the most recent rate order will begin after the next rate order.

Service life study expenses are deferred and amortized over their remaining life of two years.  Rate case filing expenses are deferred and amortized over their remaining life of one year.

Pursuant to the Tax Cuts and Jobs Act of 2017, or 2017 Tax Act, customers’ advances for construction and contributions in aid of construction are considered taxable income.  The Company’s tariff allows the Company to record these income taxes for inclusion in rate base.  This asset is recognized for ratemaking purposes on a cash or flow-through basis and will be recovered in rates as it reverses.

Under normalization rules applicable to public utility property included in the 2017 Tax Act, the excess accumulated deferred income taxes on accelerated depreciation from lowering of the enacted federal statutory corporate tax rate is recorded as a regulatory liability.  The benefit will be given back to customers in rates over the remaining regulatory life of the property.

The regulatory liability for income taxes includes deferred taxes related to excess accumulated deferred income taxes on accelerated depreciation, other postretirement benefits, customers’ advances for construction and contributions in aid of construction, and bad debts, as well as deferred investment tax credits.  These liabilities will be given back to customers in rates, as tax deductions occur over the next 1 to 50 years.

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.  The period over which it will be given back to customers in rates was established in the most recent rate order at 15 years beginning March 1, 2019.

Postretirement benefits include the difference between contributions and deferred pension expense and the overfunded status of the pension plans.  The overfunded status represents the difference between the projected benefit obligation and the fair market value of the assets.  This liability will change in future years based on the amount of contributions made and market returns.  The liability will be given back to customers in rates over some period determined by the PPUC in a future rate filing.  Postretirement benefits was a regulatory asset as of December 31, 2019.

Pursuant to a rate order approved by the PPUC, the Company has agreed to return the 2018 income tax savings pursuant to the 2017 Tax Act, the associated tax gross-up, and the excess accumulated deferred income taxes on accelerated depreciation to customers as a reconcilable negative surcharge on bills.  The Company began giving back the liability over one year  beginning March 1, 2019 and was fully returned to customers in 2020.

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.

Deferred Debt Expense

Deferred debt expense is amortized on a straight-line basis over the term of the related debt and is presented on the balance sheet as a direct reduction from long-term debt.

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.

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.  These unrealized gains and losses are 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 $342 in 2020 and $221 in 2019.  The overall swap result was a loss of $815 in 2020 and $649 in 2019.  During the twelve months ending December 31, 2021, the Company expects to reclassify $370 (before tax) from regulatory assets to interest expense.

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

Stock-Based Compensation

The Company records compensation expense in the financial statements for stock-based awards based on the grant date fair value of those awards.  Stock-based compensation expense is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term.  Forfeitures are recognized as they occur.

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, 2020 and 2019, deferred investment tax credits amounted to $500 and $539, respectively.

The Company filed for a change in accounting method under the IRS TPR effective in 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”).  After receiving approval from the PPUC in its most recent rate order, the Company began to recognize the catch-up deduction, recorded as a regulatory liability, over 15 years beginning March 1, 2019.   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.  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.

The 2017 Tax Act, among other things, reduces the federal statutory corporate tax rate for tax years beginning in 2018 from 34% to 21%, eliminates certain deductions, and eliminates bonus depreciation on qualified water and wastewater property.  This resulted in the remeasurement of the federal portion of the Company’s deferred taxes as of December 31, 2017 to the 21% rate.  The effect was recognized in income for the year ended December 31, 2017 for all deferred tax assets and liabilities except accelerated depreciation.  Under normalization rules applicable to public utility property included in the 2017 Tax Act, the excess accumulated deferred income taxes on accelerated depreciation is recorded as a regulatory liability.  The regulatory liability is a temporary difference, so a deferred tax asset is recorded including the gross-up of revenue necessary to return, in rates, the effect of the temporary difference.

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 2020 and 2019.  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.

Reclassifications

Certain 2019 amounts have been reclassified to conform to the 2020 presentation. This reclassification had no impact on the statements of income, the statement of common stockholders’ equity, or the statement of cash flows.

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Acquisitions

12 Months Ended

Dec. 31, 2020

Acquisitions [Abstract]

Acquisitions

2.  Acquisitions

On August 29, 2019, the Company completed the acquisition of the wastewater collection assets of the Jacobus Borough Sewer Authority in York County, Pennsylvania.  The Company began operating the existing collection facilities on August 30, 2019.  The acquisition resulted in the addition of approximately 700 wastewater customers with purchase price and acquisition cost of approximately $2,112, which is less than the depreciated original cost of the assets.  The Company recorded a negative acquisition adjustment of approximately $271 and will seek approval from the PPUC to amortize the acquisition adjustment over the remaining life of the acquired assets.  This acquisition is immaterial to Company results.

On April 9, 2020, the Company completed the acquisition of the wastewater collection and treatment assets of Felton Borough in York County, Pennsylvania.  The Company began operating the existing collection and treatment facilities on April 16, 2020.  The acquisition resulted in the addition of approximately 130 wastewater customers with purchase price and acquisition costs of approximately $914, which is more than the depreciated original cost of the assets net of contributions in aid of construction.  The Company recorded an acquisition adjustment of $295 and will seek approval from the PPUC to amortize the acquisition adjustment over the remaining life of the acquired assets.  This acquisition is immaterial to Company results.

On September 14, 2020, the Company completed the acquisition of the wastewater collection and treatment assets and began operating the existing collection and treatment facilities of the Letterkenny Township Municipal Authority in Franklin County, Pennsylvania.  The acquisition resulted in the addition of approximately 180 wastewater customers with purchase price and acquisition costs of approximately $262 which is less than the depreciated original cost of the assets.  The Company recorded a negative acquisition adjustment of $751 and will seek approval from the PPUC to amortize the acquisition adjustment over the remaining life of the acquired assets.  This acquisition is immaterial to Company results.

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Accounts Receivable and Contract Assets

12 Months Ended

Dec. 31, 2020

Accounts Receivable and Contract Assets [Abstract]

Accounts Receivable and Contract Assets

3.  Accounts Receivable and Contract Assets

Accounts receivable and contract assets are summarized in the following table:

	As of			As of
	Dec. 31, 2020			Dec. 31, 2019			Change
Accounts receivable – customers	$	5,633		$	4,574		$	1,059
Other receivables		206			152			54
		5,839			4,726			1,113
Less: allowance for doubtful accounts		(655	)		(305	)		(350	)
Accounts receivable, net	$	5,184		$	4,421		$	763
Unbilled revenue	$	2,847		$	2,276		$	571

Differences in timing of revenue recognition, billings, and cash collections result in receivables and contract assets.  Generally, billing occurs subsequent to revenue recognition, resulting in a contract asset reported as unbilled revenue on the balance sheet.  The Company does not receive advances or deposits from customers before revenue is recognized so no contract liabilities are reported.  Accounts receivable are recorded when the right to consideration becomes unconditional and are presented separately on the balance sheet.  The changes in accounts receivable – customers and in unbilled revenue were primarily due to normal timing difference between performance and the customer’s payments.  In 2020, a weakening in the timeliness of payments due to the COVID-19 pandemic increased the accounts receivable – customers.  This was considered in the review of the allowance for doubtful accounts resulting in the increase in the balance in 2020.

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Note Receivable and Customers' Advances for Construction

12 Months Ended

Dec. 31, 2020

Note Receivable and Customers' Advances for Construction [Abstract]

Note Receivable and Customers' Advances for Construction

4.  Note Receivable and Customers’ Advances for Construction

The Company entered into an agreement with a municipality to extend water service into a previously formed water district.  The Company loaned funds to the municipality to cover the costs related to the project.  The municipality concurrently advanced these funds back to the Company in the form of customers’ advances for construction.  The municipality is required by enacted ordinance 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 that could be used to settle the note receivable are reduced periodically as operating revenues are earned by the Company from customers connected to the system and refunds of the advance are made.  There is no due date for the notes or expiration date for the advance.

The Company recorded interest income of $139 in 2020 and $121 in 2019.  The interest rate on the note outstanding is 7.5%.

Included in the accompanying balance sheets at December 31, 2020 and 2019 were the following amounts related to this project.

	2020		2019
Note receivable, including interest	$	255	$	255
Customers’ advances for construction		302		303

The Company has other customers’ advances for construction totaling $10,024 and $7,541 at December 31, 2020 and 2019, respectively.

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Common Stock and Earnings Per Share

12 Months Ended

Dec. 31, 2020

Common Stock and Earnings Per Share [Abstract]

Common Stock and Earnings Per Share

5.  Common Stock and Earnings Per Share

Net income of $16,598 and $14,402 for the years ended December 31, 2020 and 2019 respectively, is used to calculate both basic and diluted earnings per share.  Basic net income per share is based on the weighted average number of common shares outstanding.  Diluted net income per share is based on the weighted average number of common shares outstanding plus potentially dilutive shares.  The dilutive effect of employee stock-based compensation is included in the computation of diluted net income per share.  The dilutive effect of stock-based compensation is calculated using the treasury stock method and expected proceeds upon exercise or issuance of the stock-based compensation.

The following table summarizes the shares used in computing basic and diluted net income per share:

	2020		2019
Weighted average common shares, basic		13,033,681		12,964,080
Effect of dilutive securities:
Employee stock-based compensation		839		2,212
Weighted average common shares, diluted		13,034,520		12,966,292

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 2020 and 2019 were 3,718 and 3,914, respectively.  As of December 31, 2020, 58,007 authorized shares remain unissued under the plan.

The Company has a Dividend Reinvestment and Direct Stock Purchase and Sale Plan (“the Plan”), which is available to both current shareholders and the general public.  On November 8, 2019, the Company filed a Registration Statement on Form S-3 with the Securities and Exchange Commission (SEC) to authorize an additional 157,000 shares and rollover the unissued 344,379 shares authorized under the 2016 Form S-3, for issuance under the new Prospectus for the Plan.  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).  Under the direct stock purchase portion of the Plan, purchases are made monthly at 100% of the stock’s fair market value, as defined in the new Prospectus.  The Registration Statement was declared effective by the SEC on November 18, 2019.  Shares issued during 2020 and 2019 were 37,370 and 60,485, respectively.  As of December 31, 2020, 438,519 authorized shares remain unissued under the Plan.

On March 11, 2013, the Board of Directors, or the Board, 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.  The stock repurchase program has no specific end date and 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 both 2020 and 2019, the Company did not repurchase or retire any shares.  As of December 31, 2020, 618,004 shares remain available for repurchase.

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Long-Term Debt and Short-Term Borrowings

12 Months Ended

Dec. 31, 2020

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

Long-Term Debt and Short-Term Borrowings

6.  Long-Term Debt and Short-Term Borrowings

Long-term debt as of December 31, 2020 and 2019 is summarized in the following table:

	2020			2019
10.05% Senior Notes, Series C, due 2020	$	–		$	6,500
8.43% Senior Notes, Series D, due 2022		7,500			7,500
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029		12,000			12,000
3.00% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series A of 2019, due 2036		10,500			10,500
3.10% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series B of 2019, due 2038		14,870			14,870
3.23% Senior Notes, 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			10,000
4.54% Senior Notes, due 2049		20,000			20,000
3.24% Senior Notes, due 2050		30,000			–
Committed Line of Credit, due 2022		6,700			7,672
Total long-term debt		126,570			104,042
Less discount on issuance of long-term debt		(181	)		(192	)
Less unamortized debt issuance costs		(2,816	)		(2,815	)
Less current maturities		–			(6,500	)
Long-term portion	$	123,573		$	94,535

Payments due by year as of December 31, 2020:

2021			2022			2023			2024			2025
	$	–		$	26,200		$	–		$	–		$	–

Payments due in 2022 include payback of the committed line of credit.  The committed line of credit is reviewed annually, and upon favorable outcome, would likely be extended for another year.  Payments due in 2022 also include potential payments of  $12,000 on the variable rate bonds (due 2029) which would only be payable if all bonds were tendered and could not be remarketed, or in the event the Company was unable to, or chose not to, renew the letter of credit backing the bonds.  There is currently no such indication of this happening.

Fixed Rate Long-Term Debt

On September 30, 2020, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $30,000 aggregate principal amount of the Company’s senior notes.  The senior notes bear interest at 3.24% per annum payable semiannually and mature on September 30, 2050.  The senior notes are unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting issuance costs, of approximately $29,838.  The net proceeds were used to refinance the $6,500 aggregate principal amount of the Company’s 10.05% Senior Notes, Series C, due September 30, 2020, to refinance line of credit borrowings incurred by the Company as interim financing for various capital projects, to fund acquisitions and for general corporate purposes.

On January 31, 2019, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $20,000 aggregate principal amount of the Company’s senior notes.  The senior notes bear interest at 4.54% per annum payable semiannually and mature on January 31, 2049.  The senior notes are unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting issuance costs, of approximately $19,820.  The net proceeds were used to refinance the $11,000 aggregate principal amount of the Company’s 10.17% Series A Senior Notes due February 1, 2019 and the 9.60% Series B Senior Notes due February 1, 2019, and to refinance line of credit borrowings incurred by the Company as interim financing for various capital projects of the Company.

On October 1, 2019, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $15,000 aggregate principal amount of the Company’s senior notes.  The senior notes bear interest at 3.23% per annum payable semiannually and mature on October 1, 2040.  The senior notes are unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting issuance costs, of approximately $14,888.  The net proceeds were used to refinance the $15,000 aggregate principal amount of the Company’s 5.00% Monthly Senior Notes Series 2010A due October 1, 2040.

On October 8, 2019, the Pennsylvania Economic Development Financing Authority, or PEDFA, issued and sold $10,500 aggregate principal amount of PEDFA Exempt Facilities Revenue Refunding Bonds, Series A of 2019, or the Series A Bonds, and $14,870 aggregate principal amount of PEDFA Exempt Facilities Revenue Refunding Bonds, Series B of 2019, or the Series B Bonds, for the Company’s benefit pursuant to the terms of a trust indenture, dated as of September 1, 2019, between the PEDFA and Manufacturers and Traders Trust Company, as trustee.  The PEDFA then loaned the proceeds of the issuance and sale of the Series A and the Series B Bonds to the Company pursuant to a loan agreement dated as of September 1, 2019, between the Company and the PEDFA.  The Series A Bonds, and therefore the loan, bears interest at 3.00% per annum payable semiannually and the maturity date of the loan is October 1, 2036 subject to optional and mandatory redemption provisions.  The Series B Bonds, and therefore the loan, bears interest at 3.10% per annum payable semiannually and the maturity date of the loan is November 1, 2038 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 issuance costs, of approximately $25,049.  The net proceeds were used to refinance the $10,500 aggregate principal amount of the Company’s 4.75% York County Industrial Development Authority Revenue Bonds Series 2006 due October 1, 2036 and the $14,870 aggregate principal amount of the Company’s 4.50% PEDFA Exempt Facilities Revenue Refunding Bonds Series 2014 due November 1, 2038.

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 0.62% in 2020 and 1.50%  in 2019.  As of December 31, 2020 and 2019, the interest rate was 0.12% and 1.78%, 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, 2022.  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 7 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 April 9, 2020, Standard & Poor’s affirmed the Company’s credit rating at A-, with a stable outlook and adequate liquidity.  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, 2020.  If a violation was triggered on December 31, 2020, the Company would have been required to pay the counterparty approximately $2,830.

The Company’s interest rate swap agreement provides that it pays 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 2.87% in 2020 and 1.84% in 2019.

As of December 31, 2020, there was a spread of 3 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 3.19% (including variable interest and swap payments).  As of December 31, 2019, there was a spread of 75 basis points which equated to an overall effective rate of 3.91% (including variable interest and swap payments).

Line of Credit Borrowings

In 2020, the Company entered into an agreement for a $50,000 unsecured, committed line of credit maturing in September 2022 at an interest rate of LIBOR plus 1.05% with an unused commitment fee and an interest rate floor.  Simultaneously, the Company paid off and terminated all prior existing line of credit agreements.  As of December 31, 2019, the Company maintained unsecured lines of credit aggregating $41,500 with four banks.  The first line of credit, in the amount of $13,000, was a committed line of credit with a revolving 2-year maturity and carried an interest rate of LIBOR plus 1.20%. The Company had $3,672 outstanding under this line of credit as of December 31, 2019.  The second line of credit, in the amount of $11,000, was a committed line of credit and carried an interest rate of LIBOR plus 1.25%.  The third line of credit, in the amount of $7,500, was a committed line of credit and carried an interest rate of LIBOR plus 1.15%. The Company had $4,000 outstanding under this line of credit as of December 31, 2019. The fourth line of credit, in the amount of $10,000, was a committed line of credit and carried an interest rate of LIBOR plus 1.20%. Average borrowings outstanding under the lines of credit were $7,467 in 2020 and $5,070 in 2019. The average cost of borrowings under the lines of credit was 1.59% during 2020 and 3.47% during 2019. The weighted average interest rate on the line of credit borrowings was 1.30% as of December 31, 2020 and 2.92% as of December 31, 2019.

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 the Company’s acquisition of its 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, 2020, none of the earnings retained in the business are restricted under these provisions.  The Company’s debt is unsecured.

The Company’s line of credit requires 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, 2020, the Company was in compliance with these covenants.

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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2020

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

7.  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, 2020	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,731	$2,731

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, 2020.  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, 2020.  The use of the Company’s credit quality resulted in a reduction in the swap liability of $99 as of December 31, 2020.  The fair value of the swap reflecting the Company’s credit quality as of December 31, 2019 is shown in the table below.

Description	December 31, 2019	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,248	$2,248

The carrying amount of current assets and liabilities that are considered financial instruments approximates fair value as of the dates presented.  The Company’s total long-term debt, with a carrying value of $126,570 at December 31, 2020, and $104,042 at December 31, 2019, had an estimated fair value of approximately $151,000 and $115,000, 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 the letter of credit on the 2008 PEDFA Series A issue.

Customers’ advances for construction and note receivable have carrying values at December 31, 2020 of $10,326 and $255, respectively.  At December 31, 2019, customers’ advances for construction and note receivable had carrying values of $7,844 and $255, 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.

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Commitments

12 Months Ended

Dec. 31, 2020

Commitments [Abstract]

Commitments

8.  Commitments

Based on its capital budget, the Company anticipates construction and acquisition expenditures for 2021 and 2022 of approximately $36,000 and $40,000, 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 line 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 and contributions.

The Company entered into a consent order agreement with the Pennsylvania Department of Environmental Protection in December 2016 after the Company determined it exceeded the action level for lead as established by the Lead and Copper Rule, or LCR, issued by the U.S. Environmental Protection Agency.  The Company did not have an exceedance in any subsequent compliance test.  Under the agreement, the Company committed to exceed the LCR replacement schedule by replacing all of the remaining known company-owned lead service lines withinfour years from the agreement.  The cost for these service line replacements was approximately $2,740 and $2,713 through December 31, 2020 and 2019, respectively, and is included in utility plant.  As of December 31, 2020, all known company-owned lead service lines have been replaced.  Any additional company-owned lead service lines that are discovered will be replaced but are not expected to have a material impact on the financial position of the Company.

The Company was granted approval by the PPUC, to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the agreement.  The tariff modification allows the Company to replace customer-owned service lines at its own initial cost.  The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period.  The cost for the customer-owned lead service line replacements was approximately $1,204 and $1,000 through December 31, 2020 and 2019, respectively, and is included as a regulatory asset.  Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $1,500.  This estimate is subject to adjustment as more facts become available.

As of December 31, 2020, approximately 33% of the Company’s full time employees are under union contract.  The current contract was ratified in October 2020 and expires on April 30, 2023.

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.

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Revenue

12 Months Ended

Dec. 31, 2020

Revenue [Abstract]

Revenue

9.  Revenue

The following table shows the Company’s revenues disaggregated by service and customer type.

	2020		2019
Water utility service:
Residential	$	33,987	$	32,118
Commercial and industrial		13,764		14,161
Fire protection		3,191		3,074
Wastewater utility service:
Residential		1,746		1,291
Commercial and industrial		304		280
Billing and revenue collection services		266		70
Collection services		15		52
Other revenue		23		13
Total Revenue from Contracts with Customers		53,296		51,059
Rents from regulated property		556		519
Total Operating Revenue	$	53,852	$	51,578

Utility Service

The Company provides utility service as a distinct and single performance obligation to each of its water and wastewater customers.  The transaction price is detailed in the tariff pursuant to an order by the PPUC and made publicly available.  There is no variable consideration and no free service, special rates, or subnormal charges to any customer.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of utility service through a stand-ready obligation to perform and the transfer of water or the collection of wastewater through a series of distinct transactions that are identical in nature and have the same pattern of transfer to the customer.  The Company uses an output method to recognize the utility service revenue over time.  The stand-ready obligation is recognized through the passage of time in the form of a fixed charge and the transfer of water or the collection of wastewater is recognized at a per unit rate based on the actual or estimated flow through the meter.  Each customer is invoiced every month and the invoice is due within twenty days.  The utility service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for the passage of time and the actual or estimated usage from the latest meter reading to the end of the accounting period.  The methodology is standardized and consistently applied to reduce bias and the need for judgment.

Billing and Revenue Collection Service

The Company provides billing and revenue collection service as distinct performance obligations to three municipalities within the service territory of the Company.  The municipalities provide wastewater service to their residents and the Company acts as the billing and revenue collection agent for the municipalities.  The transaction price is a fixed amount per bill prepared as established in the contract.  There is no variable consideration.  Due to the fact that both the billing performance obligation and the revenue collection performance obligation are materially complete by the end of the reporting period, the Company does not allocate the transaction price between the two performance obligations.  The performance obligations are satisfied at a point in time when the bills are sent as the municipalities receive all the benefits and bears all of the risk of non-collection at that time.  Each municipality is invoiced when the bills are complete and the invoice is due within thirty days.  The billing and revenue collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.

Collection Service

The Company provides collection service as a distinct and single performance obligation to several municipalities within the service territory of the Company.  The municipalities provide wastewater service to their residents.  If those residents are delinquent in paying for their wastewater service, the municipalities request that the Company post for and shut off the supply of water to the premises of those residents.  When the resident is no longer delinquent, the Company will restore water service to the premises.  The transaction price for each posting, each shut off, and each restoration is a fixed amount as established in the contract.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied at a point in time when the posting, shut off, or restoration is completed as the municipalities receive all the benefits in the form of payment or no longer providing wastewater service.  Each municipality is invoiced periodically for the posting, shut offs, and restorations that have been completed since the last billing and the invoice is due within thirty days.  The collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for postings, shut offs, and restorations that have been completed from the last billing to the end of the accounting period.

Service Line Protection Plan

The Company provides service line protection as a distinct and single performance obligation to current water customers that choose to participate.  The transaction price is detailed in the plan’s terms and conditions and made publicly available.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of service line protection through a stand-ready obligation to perform.  The Company uses an output method to recognize the service line protection revenue over time.  The stand-ready obligation is recognized through the passage of time.  A customer has a choice to prepay for an entire year or to pay in advance each month.  The service line protection plan has no returns or extended warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no material performance obligations remain unsatisfied as of the end of the reporting period.

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Rate Matters

12 Months Ended

Dec. 31, 2020

Rate Matters [Abstract]

Rate Matters

10.  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 30, 2018, and sought an annual increase in water rates of $6,399 and an annual increase in wastewater rates of $289.  Effective March 1, 2019, the PPUC authorized an increase in water rates designed to produce approximately $3,361 in additional annual revenues and an increase in wastewater rates designed to produce approximately $289 in additional annual revenues.

As part of a rate order approved by the PPUC, the Company has agreed to return $2,117 to customers as a reconcilable negative surcharge on their bills generated from March 2019 through February 2020 for the benefit of the lower tax rate effective January 1, 2018 resulting from the enactment of the Tax Cuts and Jobs Act of 2017, or 2017 Tax Act.  During the years ended December 31, 2020 and 2019, the Company increased its regulatory liability by reducing revenue by $1 and $325, respectively, including the gross-up of revenue necessary to return, in rates, the effect of this temporary tax difference, and reclassified $0 and $27, respectively, from excess accumulated deferred income taxes on accelerated depreciation recorded at December 31, 2017.  As of December 31, 2020 the Company returned $2,117 in negative surcharges to customers.

The PPUC permits water utilities to collect a distribution system improvement charge, or 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 DSIC reset to zero when the new base rates took effect March 1, 2019.  The DSIC provided revenues of $0 in 2020 and $249 in 2019.  The DSIC is subject to audit by the PPUC.

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2020

Employee Benefit Plans [Abstract]

Employee Benefit Plans

11.  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, 2020 and 2019.  The measurement of assets and obligations of the plans is as of December 31, 2020 and 2019.

Obligations and Funded Status At December 31	2020			2019
Change in Benefit Obligation
Pension benefit obligation, beginning of year	$	47,530		$	41,511
Service cost		938			849
Interest cost		1,457			1,645
Actuarial loss		6,165			5,241
Benefit payments		(1,984	)		(1,716	)
Pension benefit obligation, end of year		54,106			47,530
Change in Plan Assets
Fair value of plan assets, beginning of year		49,349			40,624
Actual return on plan assets		6,650			8,141
Employer contributions		2,300			2,300
Benefits paid		(1,984	)		(1,716	)
Fair value of plan assets, end of year		56,315			49,349
Funded Status of Plans at End of Year	$	2,209		$	1,819

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 otherwise recorded in accumulated other comprehensive income as a regulatory asset.  Management believes these costs will be recovered in future rates charged to customers.  The asset for the funded status of the Company’s pension plans as of  December 31, 2020 and 2019 is recorded in “Prepaid pension cost” on its balance sheets.

In 2020, the plans recognized a significant actuarial loss.  The Company adopted the new mortality improvement scale (MP-2020) but recognized an 80 basis point decrease in the discount rate. In 2019, the plans recognized a significant actuarial loss.  The Company adopted the new mortality table (Pri-2012) and the new mortality improvement scale (MP-2019) but recognized a 100 basis point decrease in the discount rate.  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:

	2020			2019
Net gain (loss) arising during the period	$	2,713		$	(167	)
Recognized net actuarial loss		(370	)		(421	)
Recognized prior service credit		13			13
Total changes in regulatory asset during the year	$	2,356		$	(575	)

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:

	2020			2019
Net loss	$	10,497		$	8,154
Prior service credit		(63	)		(76	)
Regulatory asset	$	10,434		$	8,078

Components of net periodic benefit cost are as follows:

	2020			2019
Service cost	$	938		$	849
Interest cost		1,457			1,645
Expected return on plan assets		(3,198	)		(2,733	)
Amortization of loss		370			421
Amortization of prior service credit		(13	)		(13	)
Rate-regulated adjustment		2,746			2,131
Net periodic benefit cost	$	2,300		$	2,300

Pension service cost is recorded in operating expenses.  All other components of net periodic pension cost are recorded as other pension costs in other income (expenses).

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 2020, the deferral decreased by $2,746.

The estimated costs for the defined benefit pension plans relating to the December 31, 2020 balance sheet that will be amortized from regulatory assets into net periodic benefit cost over the next fiscal year are as follows:

Net loss	$	582
Net prior service credit		(13	)
	$	569

The Company plans to contribute $2,300 to the plans in 2021.

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:

2021			2022			2023			2024			2025				2026 – 2030
	$	1,903		$	1,984		$	2,163		$	2,224		$	2,216	$	12,472

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

	2020		2019
Projected benefit obligation	$	54,106	$	47,530
Fair value of plan assets		56,315		49,349

	2020		2019
Accumulated benefit obligation	$	50,578	$	44,587
Fair value of plan assets		56,315		49,349

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

	2020	2019
Discount rate	2.30%	3.10%
Rate of compensation increase	2.50% – 3.00%	2.50% – 3.00%

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

	2020	2019
Discount rate	3.10%	4.10%
Expected long-term return on plan assets	6.50%	6.50%
Rate of compensation increase	2.50% – 3.00%	2.50% – 3.00%

The selected long-term rate of return on plan assets was primarily based on the asset allocation of each 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, 2020 and 2019 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	2020		2019		2020		2019		2020		2019
Cash and Money Market Funds (a)	$	624	$	682	$	624	$	682	$	–	$	–
Equity Securities:
Common Equity Securities (b)		–		662		–		662		–		–
Equity Mutual Funds (c)		35,707		29,677		35,707		29,677		–		–
Fixed Income Securities:
U.S. Treasury Obligations		631		615		–		–		631		615
Corporate and Foreign Bonds (d)		5,615		6,078		–		–		5,615		6,078
Fixed Income Mutual Funds (e)		13,738		11,635		13,738		11,635		–		–
Total Plan Assets	$	56,315	$	49,349	$	50,069	$	42,656	$	6,246	$	6,693

(a)	The portfolios are designed to keep up to one year of distributions in immediately available funds.
(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, telecommunications, industrials, real estate, materials, and energy.  The individual stocks are primarily large cap stocks which track with the S&P 500.
(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, energy, transportation, 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, 2020, 56 employees were participating in the enhanced feature of the plan.  The Company’s contributions to both portions of the plan amounted to $313 in 2020 and $300 in 2019.

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, 2020 and 2019, the present value of the future obligations included in "Accrued compensation and benefits" and "Deferred employee benefits" was approximately $4,757 and $4,416, respectively.  The insurance policies included in "Other assets" had a total cash value of approximately $3,735 and $3,667 at December 31, 2020 and 2019, respectively.  The Company’s net expenses under the plans amounted to $585 in 2020 and $670 in 2019.

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, 2020 and 2019, the present value of the future obligations was approximately $165 and $137, 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 expenses under the plan amounted to $38 in 2020 and $34 in 2019.

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Stock Based Compensation

12 Months Ended

Dec. 31, 2020

Stock-Based Compensation [Abstract]

Stock-Based Compensation

12.  Stock-Based Compensation

On May 2, 2016, the Company’s stockholders approved The York Water Company Long-Term Incentive Plan, or LTIP.  The LTIP was adopted to provide the incentive of long-term stock-based awards to officers, directors and key employees. The LTIP provides for the granting of nonqualified stock options, incentive stock options, stock appreciation rights, performance restricted stock grants and units, restricted stock grants and units, and unrestricted stock grants.  A maximum of 100,000 shares of common stock may be issued under the LTIP over the ten-year life of the plan.  The maximum number of shares of common stock subject to awards that may be granted to any participant in any one calendar year is 2,000.  Shares of common stock issued under the LTIP may be treasury shares or authorized but unissued shares.  The LTIP is administered by the Compensation Committee of the Board, or the full Board, provided that the full Board administers the LTIP as it relates to awards to non-employee directors of the Company.  The Company filed a registration statement with the SEC on May 11, 2016 covering the offering of stock under the LTIP.  The LTIP was effective on July 1, 2016.

On November 21, 2016, the Board awarded stock to non-employee directors effective November 28, 2016.  This stock award vested immediately.  On the same date, the Compensation Committee awarded restricted stock to officers and key employees effective November 28, 2016.  This restricted stock award vested ratably over three years beginning November 28, 2016 and has been fully recognized as of December 31, 2019.

On April 26, 2017, the Board awarded stock to non-employee directors effective May 1, 2017.  This stock award vested immediately.  On April 26, 2017, the Compensation Committee awarded restricted stock to officers and key employees effective May 1, 2017.  This restricted stock award vested ratably over three years beginning May 1, 2017 and has been fully recognized as of December 31, 2020.

On May 7, 2018, the Board awarded stock to non-employee directors effective May 7, 2018.  This stock award vested immediately.  On May 7, 2018, the Compensation Committee awarded restricted stock to officers and key employees effective May 7, 2018.  This restricted stock award vests ratably over three years beginning May 7, 2018.

On November 20, 2018, the Board accelerated the vesting period for restricted stock granted in 2016, 2017, and 2018 to one retiring officer from three years to that officer’s 2019 retirement date and has been fully recognized as of December 31, 2019.

On May 6, 2019, the Board awarded stock to non-employee directors effective May 6, 2019.  This stock award vested immediately.  On May 6, 2019, the Compensation Committee awarded restricted stock to officers and key employees effective May 6, 2019.  This restricted stock award vests ratably over three years beginning May 6, 2019.

On August 19, 2019, the Board accelerated the vesting period for restricted stock granted in 2017, 2018, and 2019 to one retiring officer from three years to that officer’s 2020 retirement date and has been fully recognized as of December 31, 2020.

On September 18, 2020, the Board awarded stock to non-employee directors effective September 18, 2020.  This stock award vested immediately.  On September 18, 2020, the Compensation Committee awarded restricted stock to officers and key employees effective September 18, 2020.  This restricted stock award vests ratably over three years beginning September 18, 2020.

The restricted stock awards provide the grantee with the rights of a shareholder, including the right to receive dividends and to vote such shares, but not the right to sell or otherwise transfer the shares during the restriction period.  As a result, the awards are included in common shares outstanding on the balance sheet.  Restricted stock awards result in compensation expense valued at the fair market value of the stock on the date of the grant and are amortized ratably over the restriction period.

The following table summarizes the stock grant amounts and activity for the years ended December 31, 2019 and 2020.

	Number of Shares	Grant Date Weighted Average Fair Value
Nonvested at beginning of the year 2019	3,080	$33.85
Granted	6,963	$33.61
Vested	(2,701)	$33.99
Forfeited	-	-
Nonvested at end of the year 2019	7,342	$33.57
Granted	4,912	$44.07
Vested	(5,491)	$36.00
Forfeited	(81)	$33.61
Nonvested at end of the year 2020	6,682	$39.30

For the years ended December 31, 2020 and 2019, the statement of income includes $154 and $166 of stock based compensation and related recognized tax benefits of $45 and $48, respectively.  The total fair value of the shares vested in the years ended December 31, 2020 and 2019 was $198 and $92, respectively.  Total stock based compensation related to nonvested awards not yet recognized is $263 at December 31, 2020 which will be recognized over the remaining three-year vesting period.

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Taxes Other than Income Taxes

12 Months Ended

Dec. 31, 2020

Taxes Other than Income Taxes [Abstract]

Taxes Other than Income Taxes

13.  Taxes Other than Income Taxes

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

	2020		2019
Regulatory Assessment	$	298	$	285
Property		353		348
Payroll, net of amounts capitalized		551		564
Other		3		3
Total taxes other than income taxes	$	1,205	$	1,200

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Income Taxes

12 Months Ended

Dec. 31, 2020

Income Taxes [Abstract]

Income Taxes

14.  Income Taxes

The provisions for income taxes consist of:

	2020			2019
Federal current	$	1,376		$	1,148
State current		554			451
Federal deferred		247			475
State deferred		(120	)		205
Federal investment tax credit, net of current utilization		(39	)		(39	)
Total income taxes	$	2,018		$	2,240

A reconciliation of the statutory Federal tax provision to the total provision follows:

	2020			2019
Statutory Federal tax provision	$	3,909		$	3,495
State income taxes, net of Federal benefit		426			574
IRS TPR deduction		(1,979	)		(1,642	)
Tax-exempt interest		(29	)		(25	)
Amortization of investment tax credit		(39	)		(39	)
Cash value of life insurance		(110	)		6
Amortization of excess accumulated deferred income taxes on accelerated depreciation		(182	)		(149	)
Other, net		22			20
Total income taxes	$	2,018		$	2,240

The Company filed for a change in accounting method under the IRS TPR effective in 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 for each year going forward (the “ongoing deduction”).  As a result of the catch-up deduction, income tax benefits of $3,887 were deferred as a regulatory liability.  After receiving approval from the PPUC in its most recent rate order, the Company began to recognize the catch-up deduction, recorded as a regulatory liability, over 15 years beginning March 1, 2019.  As a result, the Company recognized $259 and $216 in income taxes during the years ended December 31, 2020 and 2019, respectively.  As a result of the ongoing deduction, the net income tax benefits of $1,720 and $1,426 for the years ended  December 31, 2020 and 2019, 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 2017 Tax Act, among other things, reduces the federal statutory corporate tax rate for tax years beginning in 2018 from 34% to 21%, eliminates certain deductions, and eliminates bonus depreciation on qualified water and wastewater property.  This resulted in the remeasurement of the federal portion of the Company’s deferred taxes as of December 31, 2017 to the 21% rate.  The effect was recognized in income for the year ended December 31, 2017 for all deferred tax assets and liabilities except accelerated depreciation.  Under normalization rules applicable to public utility property included in the 2017 Tax Act, the excess accumulated deferred income taxes on accelerated depreciation is recorded as a regulatory liability.  The regulatory liability is a temporary difference so a deferred tax asset is recorded including the gross-up of revenue necessary to return, in rates, the effect of the temporary difference.  The Company is recognizing the excess accumulated deferred income taxes on accelerated depreciation, recorded as a regulatory liability, over the remaining useful life of the underlying assets.  As a result, the Company recognized $182 and $149 in income taxes during the years ended December 31, 2020 and 2019, respectively.

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, 2020 and 2019 are summarized in the following table:

	2020		2019
Deferred tax assets:
Reserve for doubtful accounts	$	189	$	88
Compensated absences		151		148
Deferred compensation		1,375		1,276
Excess accumulated deferred income taxes on accelerated depreciation		3,995		4,047
Deferred taxes associated with the gross-up of revenues necessary to return, in rates, the effect of temporary differences		2,456		2,104
Customers’ advances for construction and contributions in aid of construction		1,815		998
Revenue reduction for tax rate change		–		7
Tax effect of pension regulatory liability		7		–
Other costs deducted for book, not for tax		64		69
Total deferred tax assets		10,052		8,737
Deferred tax liabilities:
Accelerated depreciation		29,893		28,891
Basis differences from IRS TPR		13,671		11,311
Investment tax credit		356		384
Deferred taxes associated with the gross-up of revenues necessary to recover, in rates, the effect of temporary differences		8,088		6,987
Pensions		638		525
Tax effect of pension regulatory asset		–		106
Unamortized debt issuance costs		500		531
Other costs deducted for tax, not for book		444		428
Total deferred tax liabilities		53,590		49,163
Net deferred tax liability	$	43,538	$	40,426

In accordance with accounting standards, the net deferred tax liability is classified as a noncurrent deferred income tax liability on the balance sheets.

No valuation allowance was required for deferred tax assets as of December 31, 2020 and 2019.  In assessing the value 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 2017 through 2019 for both federal and state income tax returns.  The Company has not yet filed tax returns for 2020. The Company believes that it has fully complied with any changes pursuant to the 2017 Tax Act and has not taken any new positions in its 2020 income tax provision.

The Company’s policy is to recognize interest and penalties related to income tax matters in other expenses.  The Company paid no interest or penalties for the years ended December 31, 2020 and 2019, respectively.

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Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2020

Schedule II - Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

THE YORK WATER COMPANY

Schedule II Valuation and Qualifying Accounts

For the Two Years Ended December 31, 2020

				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, 2020 Reserve for uncollectible accounts		$	305,000		$	613,556		$	54,653		$	318,209		$	655,000
For the Year Ended December 31, 2019 Reserve for uncollectible accounts		$	305,000		$	258,542		$	51,900		$	310,442		$	305,000

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

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Significant Accounting Policies [Abstract]

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, 2020 and 2019, utility plant includes a net credit acquisition adjustment of $3,707 and $3,318, 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 $67 and $61 for the years ended December 31, 2020 and 2019, respectively.

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	2020		2019		of remaining lives
Mains and accessories	$	212,164	$	200,954	10 – 86 years
Services, meters and hydrants		80,590		77,501	17 – 51 years
Operations structures, reservoirs and water tanks		65,617		63,530	9 – 58 years
Pumping and treatment equipment		34,163		33,124	6 – 30 years
Office, transportation and operating equipment		15,520		14,464	3 – 22 years
Land and other non-depreciable assets		3,478		3,393	–
Utility plant in service		411,532		392,966
Construction work in progress		27,138		8,417	–
Total Utility Plant	$	438,670	$	401,383

The effective rate of depreciation was 2.33% in 2020 and 2.29% in 2019, 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 an original 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 considers any cash account that it cannot access on demand due to contractual or legal reasons to be restricted cash.

At December 31, 2020, the Company held $5,000 in restricted cash which was a bid deposit held in escrow for a potential acquisition.  At December 31, 2019, the Company held no restricted cash.

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.

Materials and Supplies Inventories

Materials and Supplies Inventories

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

Note Receivable

Note Receivable

Note receivable is recorded at cost and represents amounts due from a municipality for construction of water mains in their 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
	2020		2019		Periods
Assets
Income taxes	$	28,200	$	24,405	Various
Postretirement benefits		–		365	-
Unrealized swap losses		2,700		2,227	1 – 9 years
Utility plant retirement costs		5,968		5,012	5 years
Customer-owned lead service line replacements		1,081		944	Various
Income taxes on customers’ advances for construction and contributions in aid of construction		1,815		998	Various
Service life study expenses		8		13	2 years
Rate case filing expenses		121		225	1 year
	$	39,893	$	34,189
Liabilities
Excess accumulated deferred income taxes on accelerated depreciation	$	13,826	$	14,008	Various
Income taxes		8,706		7,494	Various
IRS TPR catch-up deduction		3,412		3,671	13 years
Postretirement benefits		25		–	Not yet known
Revenue reduction for tax rate change		–		226	-
	$	25,969	$	25,399

The regulatory asset for income taxes includes (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.

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 term of 9 years.

Utility plant retirement costs represents costs already incurred for the removal of assets, which are expected to be recovered over a five-year period in rates, through depreciation expense.

The Company was granted approval by the PPUC to modify its tariff to replace lead customer-owned service lines that are discovered when the Company replaces its lead service lines over the remaining three years, and to include the cost of the annual replacement of up to 400 lead customer-owned service lines whenever they are discovered, regardless of the material used for the company-owned service line over nine years.  The tariff modification allows the Company to replace customer-owned service lines at its own initial cost and record the costs as a regulatory asset to be recovered in future base rates to customers.  The recovery period was established in the most recent rate order at four years beginning March 1, 2019.  The recovery period for the customer-owned lead service line replacements completed subsequent to the most recent rate order will begin after the next rate order.

Service life study expenses are deferred and amortized over their remaining life of two years.  Rate case filing expenses are deferred and amortized over their remaining life of one year.

Pursuant to the Tax Cuts and Jobs Act of 2017, or 2017 Tax Act, customers’ advances for construction and contributions in aid of construction are considered taxable income.  The Company’s tariff allows the Company to record these income taxes for inclusion in rate base.  This asset is recognized for ratemaking purposes on a cash or flow-through basis and will be recovered in rates as it reverses.

Under normalization rules applicable to public utility property included in the 2017 Tax Act, the excess accumulated deferred income taxes on accelerated depreciation from lowering of the enacted federal statutory corporate tax rate is recorded as a regulatory liability.  The benefit will be given back to customers in rates over the remaining regulatory life of the property.

The regulatory liability for income taxes includes deferred taxes related to excess accumulated deferred income taxes on accelerated depreciation, other postretirement benefits, customers’ advances for construction and contributions in aid of construction, and bad debts, as well as deferred investment tax credits.  These liabilities will be given back to customers in rates, as tax deductions occur over the next 1 to 50 years.

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.  The period over which it will be given back to customers in rates was established in the most recent rate order at 15 years beginning March 1, 2019.

Postretirement benefits include the difference between contributions and deferred pension expense and the overfunded status of the pension plans.  The overfunded status represents the difference between the projected benefit obligation and the fair market value of the assets.  This liability will change in future years based on the amount of contributions made and market returns.  The liability will be given back to customers in rates over some period determined by the PPUC in a future rate filing.  Postretirement benefits was a regulatory asset as of December 31, 2019.

Pursuant to a rate order approved by the PPUC, the Company has agreed to return the 2018 income tax savings pursuant to the 2017 Tax Act, the associated tax gross-up, and the excess accumulated deferred income taxes on accelerated depreciation to customers as a reconcilable negative surcharge on bills.  The Company began giving back the liability over one year  beginning March 1, 2019 and was fully returned to customers in 2020.

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.

Deferred Debt Expense

Deferred Debt Expense

Deferred debt expense is amortized on a straight-line basis over the term of the related debt and is presented on the balance sheet as a direct reduction from long-term debt.

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.

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.  These unrealized gains and losses are 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 $342 in 2020 and $221 in 2019.  The overall swap result was a loss of $815 in 2020 and $649 in 2019.  During the twelve months ending December 31, 2021, the Company expects to reclassify $370 (before tax) from regulatory assets to interest expense.

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

Stock-Based Compensation

Stock-Based Compensation

The Company records compensation expense in the financial statements for stock-based awards based on the grant date fair value of those awards.  Stock-based compensation expense is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term.  Forfeitures are recognized as they occur.

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, 2020 and 2019, deferred investment tax credits amounted to $500 and $539, respectively.

The Company filed for a change in accounting method under the IRS TPR effective in 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”).  After receiving approval from the PPUC in its most recent rate order, the Company began to recognize the catch-up deduction, recorded as a regulatory liability, over 15 years beginning March 1, 2019.   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.  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.

The 2017 Tax Act, among other things, reduces the federal statutory corporate tax rate for tax years beginning in 2018 from 34% to 21%, eliminates certain deductions, and eliminates bonus depreciation on qualified water and wastewater property.  This resulted in the remeasurement of the federal portion of the Company’s deferred taxes as of December 31, 2017 to the 21% rate.  The effect was recognized in income for the year ended December 31, 2017 for all deferred tax assets and liabilities except accelerated depreciation.  Under normalization rules applicable to public utility property included in the 2017 Tax Act, the excess accumulated deferred income taxes on accelerated depreciation is recorded as a regulatory liability.  The regulatory liability is a temporary difference, so a deferred tax asset is recorded including the gross-up of revenue necessary to return, in rates, the effect of the temporary difference.

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 2020 and 2019.  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.

Reclassifications

Reclassifications

Certain 2019 amounts have been reclassified to conform to the 2020 presentation. This reclassification had no impact on the statements of income, the statement of common stockholders’ equity, or the statement of cash flows.

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Revenue (Policies)

12 Months Ended

Dec. 31, 2020

Revenue [Abstract]

Revenue

Utility Service

The Company provides utility service as a distinct and single performance obligation to each of its water and wastewater customers.  The transaction price is detailed in the tariff pursuant to an order by the PPUC and made publicly available.  There is no variable consideration and no free service, special rates, or subnormal charges to any customer.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of utility service through a stand-ready obligation to perform and the transfer of water or the collection of wastewater through a series of distinct transactions that are identical in nature and have the same pattern of transfer to the customer.  The Company uses an output method to recognize the utility service revenue over time.  The stand-ready obligation is recognized through the passage of time in the form of a fixed charge and the transfer of water or the collection of wastewater is recognized at a per unit rate based on the actual or estimated flow through the meter.  Each customer is invoiced every month and the invoice is due within twenty days.  The utility service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for the passage of time and the actual or estimated usage from the latest meter reading to the end of the accounting period.  The methodology is standardized and consistently applied to reduce bias and the need for judgment.

Billing and Revenue Collection Service

The Company provides billing and revenue collection service as distinct performance obligations to three municipalities within the service territory of the Company.  The municipalities provide wastewater service to their residents and the Company acts as the billing and revenue collection agent for the municipalities.  The transaction price is a fixed amount per bill prepared as established in the contract.  There is no variable consideration.  Due to the fact that both the billing performance obligation and the revenue collection performance obligation are materially complete by the end of the reporting period, the Company does not allocate the transaction price between the two performance obligations.  The performance obligations are satisfied at a point in time when the bills are sent as the municipalities receive all the benefits and bears all of the risk of non-collection at that time.  Each municipality is invoiced when the bills are complete and the invoice is due within thirty days.  The billing and revenue collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.

Collection Service

The Company provides collection service as a distinct and single performance obligation to several municipalities within the service territory of the Company.  The municipalities provide wastewater service to their residents.  If those residents are delinquent in paying for their wastewater service, the municipalities request that the Company post for and shut off the supply of water to the premises of those residents.  When the resident is no longer delinquent, the Company will restore water service to the premises.  The transaction price for each posting, each shut off, and each restoration is a fixed amount as established in the contract.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied at a point in time when the posting, shut off, or restoration is completed as the municipalities receive all the benefits in the form of payment or no longer providing wastewater service.  Each municipality is invoiced periodically for the posting, shut offs, and restorations that have been completed since the last billing and the invoice is due within thirty days.  The collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for postings, shut offs, and restorations that have been completed from the last billing to the end of the accounting period.

Service Line Protection Plan

The Company provides service line protection as a distinct and single performance obligation to current water customers that choose to participate.  The transaction price is detailed in the plan’s terms and conditions and made publicly available.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of service line protection through a stand-ready obligation to perform.  The Company uses an output method to recognize the service line protection revenue over time.  The stand-ready obligation is recognized through the passage of time.  A customer has a choice to prepay for an entire year or to pay in advance each month.  The service line protection plan has no returns or extended warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no material performance obligations remain unsatisfied as of the end of the reporting period.

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2020

Significant Accounting Policies [Abstract]

Utility Plant

The following remaining lives are used for financial reporting purposes:

	December 31				Approximate range
Utility Plant Asset Category	2020		2019		of remaining lives
Mains and accessories	$	212,164	$	200,954	10 – 86 years
Services, meters and hydrants		80,590		77,501	17 – 51 years
Operations structures, reservoirs and water tanks		65,617		63,530	9 – 58 years
Pumping and treatment equipment		34,163		33,124	6 – 30 years
Office, transportation and operating equipment		15,520		14,464	3 – 22 years
Land and other non-depreciable assets		3,478		3,393	–
Utility plant in service		411,532		392,966
Construction work in progress		27,138		8,417	–
Total Utility Plant	$	438,670	$	401,383

Regulatory Assets and Liabilities

Regulatory assets and liabilities are comprised of the following:

	December 31				Remaining Recovery
	2020		2019		Periods
Assets
Income taxes	$	28,200	$	24,405	Various
Postretirement benefits		–		365	-
Unrealized swap losses		2,700		2,227	1 – 9 years
Utility plant retirement costs		5,968		5,012	5 years
Customer-owned lead service line replacements		1,081		944	Various
Income taxes on customers’ advances for construction and contributions in aid of construction		1,815		998	Various
Service life study expenses		8		13	2 years
Rate case filing expenses		121		225	1 year
	$	39,893	$	34,189
Liabilities
Excess accumulated deferred income taxes on accelerated depreciation	$	13,826	$	14,008	Various
Income taxes		8,706		7,494	Various
IRS TPR catch-up deduction		3,412		3,671	13 years
Postretirement benefits		25		–	Not yet known
Revenue reduction for tax rate change		–		226	-
	$	25,969	$	25,399

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Accounts Receivable and Contract Assets (Tables)

12 Months Ended

Dec. 31, 2020

Accounts Receivable and Contract Assets [Abstract]

Accounts Receivable and Contract Assets

Accounts receivable and contract assets are summarized in the following table:

	As of			As of
	Dec. 31, 2020			Dec. 31, 2019			Change
Accounts receivable – customers	$	5,633		$	4,574		$	1,059
Other receivables		206			152			54
		5,839			4,726			1,113
Less: allowance for doubtful accounts		(655	)		(305	)		(350	)
Accounts receivable, net	$	5,184		$	4,421		$	763
Unbilled revenue	$	2,847		$	2,276		$	571

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Note Receivable and Customers' Advances for Construction (Tables)

12 Months Ended

Dec. 31, 2020

Note Receivable and Customers' Advances for Construction [Abstract]

Amounts Related to Water District Projects

Included in the accompanying balance sheets at December 31, 2020 and 2019 were the following amounts related to this project.

	2020		2019
Note receivable, including interest	$	255	$	255
Customers’ advances for construction		302		303

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Common Stock and Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2020

Common Stock and Earnings Per Share [Abstract]

Shares Used in Computing Basic and Diluted Earnings per Share

The following table summarizes the shares used in computing basic and diluted net income per share:

	2020		2019
Weighted average common shares, basic		13,033,681		12,964,080
Effect of dilutive securities:
Employee stock-based compensation		839		2,212
Weighted average common shares, diluted		13,034,520		12,966,292

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Long-Term Debt and Short-Term Borrowings (Tables)

12 Months Ended

Dec. 31, 2020

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

Long-Term Debt

Long-term debt as of December 31, 2020 and 2019 is summarized in the following table:

	2020			2019
10.05% Senior Notes, Series C, due 2020	$	–		$	6,500
8.43% Senior Notes, Series D, due 2022		7,500			7,500
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029		12,000			12,000
3.00% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series A of 2019, due 2036		10,500			10,500
3.10% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series B of 2019, due 2038		14,870			14,870
3.23% Senior Notes, 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			10,000
4.54% Senior Notes, due 2049		20,000			20,000
3.24% Senior Notes, due 2050		30,000			–
Committed Line of Credit, due 2022		6,700			7,672
Total long-term debt		126,570			104,042
Less discount on issuance of long-term debt		(181	)		(192	)
Less unamortized debt issuance costs		(2,816	)		(2,815	)
Less current maturities		–			(6,500	)
Long-term portion	$	123,573		$	94,535

Payments Due by Year

Payments due by year as of December 31, 2020:

2021			2022			2023			2024			2025
	$	–		$	26,200		$	–		$	–		$	–

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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2020

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, 2020	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,731	$2,731

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, 2020.  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, 2020.  The use of the Company’s credit quality resulted in a reduction in the swap liability of $99 as of December 31, 2020.  The fair value of the swap reflecting the Company’s credit quality as of December 31, 2019 is shown in the table below.

Description	December 31, 2019	Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap	$2,248	$2,248

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Revenue (Tables)

12 Months Ended

Dec. 31, 2020

Revenue [Abstract]

Revenues Disaggregated by Service and Customer Type

The following table shows the Company’s revenues disaggregated by service and customer type.

	2020		2019
Water utility service:
Residential	$	33,987	$	32,118
Commercial and industrial		13,764		14,161
Fire protection		3,191		3,074
Wastewater utility service:
Residential		1,746		1,291
Commercial and industrial		304		280
Billing and revenue collection services		266		70
Collection services		15		52
Other revenue		23		13
Total Revenue from Contracts with Customers		53,296		51,059
Rents from regulated property		556		519
Total Operating Revenue	$	53,852	$	51,578

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Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2020

Employee Benefit Plans [Abstract]

Obligations and Funded Status

The following table sets forth the plans’ funded status as of December 31, 2020 and 2019.  The measurement of assets and obligations of the plans is as of December 31, 2020 and 2019.

Obligations and Funded Status At December 31	2020			2019
Change in Benefit Obligation
Pension benefit obligation, beginning of year	$	47,530		$	41,511
Service cost		938			849
Interest cost		1,457			1,645
Actuarial loss		6,165			5,241
Benefit payments		(1,984	)		(1,716	)
Pension benefit obligation, end of year		54,106			47,530
Change in Plan Assets
Fair value of plan assets, beginning of year		49,349			40,624
Actual return on plan assets		6,650			8,141
Employer contributions		2,300			2,300
Benefits paid		(1,984	)		(1,716	)
Fair value of plan assets, end of year		56,315			49,349
Funded Status of Plans at End of Year	$	2,209		$	1,819

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:

	2020			2019
Net gain (loss) arising during the period	$	2,713		$	(167	)
Recognized net actuarial loss		(370	)		(421	)
Recognized prior service credit		13			13
Total changes in regulatory asset during the year	$	2,356		$	(575	)

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:

	2020			2019
Net loss	$	10,497		$	8,154
Prior service credit		(63	)		(76	)
Regulatory asset	$	10,434		$	8,078

Components of Net Periodic Benefit Cost

Components of net periodic benefit cost are as follows:

	2020			2019
Service cost	$	938		$	849
Interest cost		1,457			1,645
Expected return on plan assets		(3,198	)		(2,733	)
Amortization of loss		370			421
Amortization of prior service credit		(13	)		(13	)
Rate-regulated adjustment		2,746			2,131
Net periodic benefit cost	$	2,300		$	2,300

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, 2020 balance sheet that will be amortized from regulatory assets into net periodic benefit cost over the next fiscal year are as follows:

Net loss	$	582
Net prior service credit		(13	)
	$	569

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:

2021			2022			2023			2024			2025				2026 – 2030
	$	1,903		$	1,984		$	2,163		$	2,224		$	2,216	$	12,472

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:

	2020		2019
Projected benefit obligation	$	54,106	$	47,530
Fair value of plan assets		56,315		49,349

Accumulated Benefit Obligation and Fair Value of Plan Assets

	2020		2019
Accumulated benefit obligation	$	50,578	$	44,587
Fair value of plan assets		56,315		49,349

Weighted-Average Assumptions Used

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

	2020	2019
Discount rate	2.30%	3.10%
Rate of compensation increase	2.50% – 3.00%	2.50% – 3.00%

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

	2020	2019
Discount rate	3.10%	4.10%
Expected long-term return on plan assets	6.50%	6.50%
Rate of compensation increase	2.50% – 3.00%	2.50% – 3.00%

Fair Values of Pension Plan Assets

The fair values of the Company’s pension plan assets at December 31, 2020 and 2019 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	2020		2019		2020		2019		2020		2019
Cash and Money Market Funds (a)	$	624	$	682	$	624	$	682	$	–	$	–
Equity Securities:
Common Equity Securities (b)		–		662		–		662		–		–
Equity Mutual Funds (c)		35,707		29,677		35,707		29,677		–		–
Fixed Income Securities:
U.S. Treasury Obligations		631		615		–		–		631		615
Corporate and Foreign Bonds (d)		5,615		6,078		–		–		5,615		6,078
Fixed Income Mutual Funds (e)		13,738		11,635		13,738		11,635		–		–
Total Plan Assets	$	56,315	$	49,349	$	50,069	$	42,656	$	6,246	$	6,693

(a)	The portfolios are designed to keep up to one year of distributions in immediately available funds.
(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, telecommunications, industrials, real estate, materials, and energy.  The individual stocks are primarily large cap stocks which track with the S&P 500.
(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, energy, transportation, 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.

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Stock Based Compensation (Tables)

12 Months Ended

Dec. 31, 2020

Stock-Based Compensation [Abstract]

Restricted Stock

The following table summarizes the stock grant amounts and activity for the years ended December 31, 2019 and 2020.

	Number of Shares	Grant Date Weighted Average Fair Value
Nonvested at beginning of the year 2019	3,080	$33.85
Granted	6,963	$33.61
Vested	(2,701)	$33.99
Forfeited	-	-
Nonvested at end of the year 2019	7,342	$33.57
Granted	4,912	$44.07
Vested	(5,491)	$36.00
Forfeited	(81)	$33.61
Nonvested at end of the year 2020	6,682	$39.30

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Taxes Other than Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

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:

	2020		2019
Regulatory Assessment	$	298	$	285
Property		353		348
Payroll, net of amounts capitalized		551		564
Other		3		3
Total taxes other than income taxes	$	1,205	$	1,200

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Taxes [Abstract]

Provisions for Income Taxes

The provisions for income taxes consist of:

	2020			2019
Federal current	$	1,376		$	1,148
State current		554			451
Federal deferred		247			475
State deferred		(120	)		205
Federal investment tax credit, net of current utilization		(39	)		(39	)
Total income taxes	$	2,018		$	2,240

Reconciliation of Statutory Federal Tax Provision to Total Provision

A reconciliation of the statutory Federal tax provision to the total provision follows:

	2020			2019
Statutory Federal tax provision	$	3,909		$	3,495
State income taxes, net of Federal benefit		426			574
IRS TPR deduction		(1,979	)		(1,642	)
Tax-exempt interest		(29	)		(25	)
Amortization of investment tax credit		(39	)		(39	)
Cash value of life insurance		(110	)		6
Amortization of excess accumulated deferred income taxes on accelerated depreciation		(182	)		(149	)
Other, net		22			20
Total income taxes	$	2,018		$	2,240

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, 2020 and 2019 are summarized in the following table:

	2020		2019
Deferred tax assets:
Reserve for doubtful accounts	$	189	$	88
Compensated absences		151		148
Deferred compensation		1,375		1,276
Excess accumulated deferred income taxes on accelerated depreciation		3,995		4,047
Deferred taxes associated with the gross-up of revenues necessary to return, in rates, the effect of temporary differences		2,456		2,104
Customers’ advances for construction and contributions in aid of construction		1,815		998
Revenue reduction for tax rate change		–		7
Tax effect of pension regulatory liability		7		–
Other costs deducted for book, not for tax		64		69
Total deferred tax assets		10,052		8,737
Deferred tax liabilities:
Accelerated depreciation		29,893		28,891
Basis differences from IRS TPR		13,671		11,311
Investment tax credit		356		384
Deferred taxes associated with the gross-up of revenues necessary to recover, in rates, the effect of temporary differences		8,088		6,987
Pensions		638		525
Tax effect of pension regulatory asset		–		106
Unamortized debt issuance costs		500		531
Other costs deducted for tax, not for book		444		428
Total deferred tax liabilities		53,590		49,163
Net deferred tax liability	$	43,538	$	40,426

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Significant Accounting Policies, Utility Plant and Depreciation (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) System County	Dec. 31, 2019 USD ($)
Significant Accounting Policies [Abstract]
Number of wastewater collection systems operated | System	2
Number of wastewater collection and treatment systems operated | System	5
Number of counties in which franchised territory is located | County	3
Utility Plant and Depreciation [Abstract]
Utility plant acquisition adjustments	$ 3,707	$ 3,318
Amortization of utility plant acquisition adjustments	67	61
Utility plant	$ 438,670	$ 401,383
Effective rate of depreciation	2.33%	2.29%
Mains and Accessories [Member]
Utility Plant and Depreciation [Abstract]
Utility plant	$ 212,164	$ 200,954
Mains and Accessories [Member] | Minimum [Member]
Utility Plant and Depreciation [Abstract]
Remaining life	10 years
Mains and Accessories [Member] | Maximum [Member]
Utility Plant and Depreciation [Abstract]
Remaining life	86 years
Services, Meters and Hydrants [Member]
Utility Plant and Depreciation [Abstract]
Utility plant	$ 80,590	77,501
Services, Meters and Hydrants [Member] | Minimum [Member]
Utility Plant and Depreciation [Abstract]
Remaining life	17 years
Services, Meters and Hydrants [Member] | Maximum [Member]
Utility Plant and Depreciation [Abstract]
Remaining life	51 years
Operations Structures, Reservoirs and Water Tanks [Member]
Utility Plant and Depreciation [Abstract]
Utility plant	$ 65,617	63,530
Operations Structures, Reservoirs and Water Tanks [Member] | Minimum [Member]
Utility Plant and Depreciation [Abstract]
Remaining life	9 years
Operations Structures, Reservoirs and Water Tanks [Member] | Maximum [Member]
Utility Plant and Depreciation [Abstract]
Remaining life	58 years
Pumping and Treatment Equipment [Member]
Utility Plant and Depreciation [Abstract]
Utility plant	$ 34,163	33,124
Pumping and Treatment Equipment [Member] | Minimum [Member]
Utility Plant and Depreciation [Abstract]
Remaining life	6 years
Pumping and Treatment Equipment [Member] | Maximum [Member]
Utility Plant and Depreciation [Abstract]
Remaining life	30 years
Office, Transportation and Operating Equipment [Member]
Utility Plant and Depreciation [Abstract]
Utility plant	$ 15,520	14,464
Office, Transportation and Operating Equipment [Member] | Minimum [Member]
Utility Plant and Depreciation [Abstract]
Remaining life	3 years
Office, Transportation and Operating Equipment [Member] | Maximum [Member]
Utility Plant and Depreciation [Abstract]
Remaining life	22 years
Land and Other Non-Depreciable Assets [Member]
Utility Plant and Depreciation [Abstract]
Utility plant	$ 3,478	3,393
Utility Plant in Service [Member]
Utility Plant and Depreciation [Abstract]
Utility plant	411,532	392,966
Construction Work in Progress [Member]
Utility Plant and Depreciation [Abstract]
Utility plant	$ 27,138	$ 8,417

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Significant Accounting Policies, Restricted Cash (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Significant Accounting Policies [Abstract]
Restricted cash	$ 5,000	$ 0

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Significant Accounting Policies, Regulatory Assets and Liabilities (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) ServiceLine	Dec. 31, 2019 USD ($)	Dec. 31, 2014 USD ($)
Assets [Abstract]
Regulatory assets	$ 39,893	$ 34,189
Liabilities [Abstract]
Regulatory liabilities	25,969	25,399
Excess Accumulated Deferred Income Taxes on Accelerated Depreciation [Member]
Liabilities [Abstract]
Regulatory liabilities	13,826	14,008
Income Taxes [Member]
Liabilities [Abstract]
Regulatory liabilities	$ 8,706	7,494
Income Taxes [Member] | Minimum [Member]
Liabilities [Abstract]
Remaining recovery period	1 year
Income Taxes [Member] | Maximum [Member]
Liabilities [Abstract]
Remaining recovery period	50 years
IRS TPR Catch-Up Deduction [Member]
Liabilities [Abstract]
Regulatory liabilities	$ 3,412	3,671	$ 3,887
Remaining recovery period	13 years
Postretirement Benefits [Member]
Liabilities [Abstract]
Regulatory liabilities	$ 25	0
Revenue Reduction For Tax Rate Change [Member]
Liabilities [Abstract]
Regulatory liabilities	$ 0	226
Term for negative surcharge on bills to customers	1 year
Income Taxes [Member]
Assets [Abstract]
Regulatory assets	$ 28,200	24,405
Postretirement Benefits [Member]
Assets [Abstract]
Regulatory assets	0	365
Unrealized Swap Losses [Member]
Assets [Abstract]
Regulatory assets	$ 2,700	2,227
Unrealized Swap Losses [Member] | Minimum [Member]
Assets [Abstract]
Remaining recovery period	1 year
Unrealized Swap Losses [Member] | Maximum [Member]
Assets [Abstract]
Remaining recovery period	9 years
Utility Plant Retirement Costs [Member]
Assets [Abstract]
Regulatory assets	$ 5,968	5,012
Remaining recovery period	5 years
Customer-Owned Lead Service Line Replacements [Member]
Assets [Abstract]
Regulatory assets	$ 1,081	944
Remaining recovery period	4 years
Term of tariff modification to replace customer-owned lead service lines connected to company-owned lead service lines	3 years
Number of lead customer-owned service lines to be replaced annually | ServiceLine	400
Term of tariff modification to replace customer-owned lead service lines	9 years
Income Taxes on Customers' Advances for Construction and Contributions in Aid of Construction [Member]
Assets [Abstract]
Regulatory assets	$ 1,815	998
Service Life Study Expenses [Member]
Assets [Abstract]
Regulatory assets	$ 8	13
Remaining recovery period	2 years
Rate Case Filing Expenses [Member]
Assets [Abstract]
Regulatory assets	$ 121	$ 225
Remaining recovery period	1 year

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Significant Accounting Policies, Interest Rate Swap Agreement (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Interest Rate Swap Agreement [Abstract]
Interest rate swap settlements reclassified from regulatory assets to interest expense	$ 342	$ 221
Overall interest rate swap (gain) loss	815	$ 649
Interest rate swap settlements to be reclassified during the next 12 months	$ 370

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Significant Accounting Policies, Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2017
Income Taxes [Abstract]
Deferred investment tax credits	$ 500	$ 539
Federal corporate tax rate	21.00%	21.00%	34.00%
IRS TPR Catch-Up Deduction [Member]
Income Taxes [Abstract]
Approved amortization period	15 years

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Significant Accounting Policies, Allowance for Funds Used During Construction (Details)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Allowance for Funds Used During Construction [Abstract]
PPUC approved rate for AFUDC	10.04%	10.04%

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Acquisitions (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Sep. 14, 2020 Customer	Apr. 09, 2020 Customer	Aug. 29, 2019 Customer
Acquisitions [Abstract]
Purchase price	$ 1,176	$ 2,112
Acquisition adjustment	(3,707)	(3,318)
Wastewater Collection Assets of Jacobus Borough Sewer Authority [Member]
Acquisitions [Abstract]
Number of customers acquired | Customer					700
Purchase price		2,112
Acquisition adjustment		$ (271)
Wastewater Collection and Treatment Assets of Felton Borough [Member]
Acquisitions [Abstract]
Number of customers acquired | Customer				130
Purchase price	914
Acquisition adjustment	295
Wastewater Collection and Treatment Assets of Letterkenny Township Municipal Authority [Member]
Acquisitions [Abstract]
Number of customers acquired | Customer			180
Purchase price	262
Acquisition adjustment	$ (751)

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Accounts Receivable and Contract Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Accounts Receivable and Contract Assets [Abstract]
Accounts receivable - customers	$ 5,633	$ 4,574
Other receivables	206	152
Accounts receivable	5,839	4,726
Less: allowance for doubtful accounts	(655)	(305)
Accounts receivable, net	5,184	4,421
Unbilled revenue	2,847	$ 2,276
Change in accounts receivable - customers	1,059
Change in other receivables	54
Change in accounts receivable	1,113
Change in allowance for doubtful accounts	(350)
Change in accounts receivable, net	763
Change in unbilled revenue	$ 571

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Note Receivable and Customers' Advances for Construction (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) Municipality	Dec. 31, 2019 USD ($)
Note Receivable and Customers' Advances for Construction [Abstract]
Number of municipalities with agreements to extend water service | Municipality	1
Interest income on note receivable	$ 139	$ 121
Interest rate on note outstanding	7.50%
Amounts Related to Water District Projects Included in Balance Sheet [Abstract]
Note receivable, including interest	$ 255	255
Customers' advances for construction	302	303
Other customers' advances for construction	$ 10,024	$ 7,541

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Common Stock and Earnings Per Share (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Nov. 08, 2019	Mar. 11, 2013
Common Stock and Earnings Per Share [Abstract]
Net income	$ 16,598	$ 14,402
Shares Used in Computing Basic and Diluted Earnings per Share [Abstract]
Weighted average common shares, basic (in shares)	13,033,681	12,964,080
Effect of dilutive securities [Abstract]
Employee stock-based compensation (in shares)	839	2,212
Weighted average common shares, diluted (in shares)	13,034,520	12,966,292
Stock Repurchase Program [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)	0	0
Number of remaining shares authorized to be repurchased under the stock repurchase program (in shares)	618,004
Employee Stock Purchase Plan [Member]
Common Stock [Abstract]
Minimum period full-time employees must be employed to purchase shares	90 days
Maximum percentage of gross compensation allowed to purchase shares	10.00%
Purchase price as a percentage of fair market value of common stock	95.00%
Number of shares issued (in shares)	3,718	3,914
Number of authorized shares remaining to be issued (in shares)	58,007
Dividend Reinvestment and Direct Stock Purchase and Sale Plan [Member]
Common Stock [Abstract]
Number of shares authorized to be issued (in shares)			157,000
Number of shares authorized, unissued, and rolled over under plan (in shares)			344,379
Number of shares issued (in shares)	37,370	60,485
Number of authorized shares remaining to be issued (in shares)	438,519
Optional Dividend Reinvestment Portion of Plan [Member]
Common Stock [Abstract]
Purchase price as a percentage of fair market value of common stock	95.00%
Direct Stock Purchase Portion of Plan [Member]
Common Stock [Abstract]
Purchase price as a percentage of fair market value of common stock	100.00%

XML

Long-Term Debt and Short-Term Borrowings, Long-Term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020	Dec. 31, 2019	Oct. 08, 2019	Oct. 01, 2019	Jan. 31, 2019
Long-term Debt [Abstract]
Long-term debt	$ 126,570		$ 104,042
Less discount on issuance of long-term debt	(181)		(192)
Less unamortized debt issuance costs	(2,816)		(2,815)
Less current maturities	0		(6,500)
Long-term portion	123,573		94,535
10.05% Senior Notes, Series C, due 2020 [Member]
Long-term Debt [Abstract]
Long-term debt	$ 0		6,500
Interest rate	10.05%	10.05%
8.43% Senior Notes, Series D, due 2022 [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 Refunding Bonds, Series 2008A, due 2029 [Member]
Long-term Debt [Abstract]
Long-term debt	$ 12,000		12,000
3.00% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series A of 2019, due 2036 [Member]
Long-term Debt [Abstract]
Long-term debt	$ 10,500		10,500
Interest rate	3.00%			3.00%
3.10% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series B of 2019, due 2038 [Member]
Long-term Debt [Abstract]
Long-term debt	$ 14,870		14,870
Interest rate	3.10%			3.10%
3.23% Senior Notes, due 2040 [Member]
Long-term Debt [Abstract]
Long-term debt	$ 15,000		15,000
Interest rate	3.23%				3.23%
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		10,000
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%
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%
4.54% Senior Notes, due 2049 [Member]
Long-term Debt [Abstract]
Long-term debt	$ 20,000		20,000
Interest rate	4.54%					4.54%
3.24% Senior Notes, due 2050 [Member]
Long-term Debt [Abstract]
Long-term debt	$ 30,000		0
Interest rate	3.24%
Committed Line of Credit, due 2022 [Member]
Long-term Debt [Abstract]
Long-term debt	$ 6,700		$ 7,672

XML

Long-Term Debt and Short-Term Borrowings, Payments Due by Year (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Payments Due by Year [Abstract]
2021	$ 0
2022	26,200
2023	0
2024	0
2025	0
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029 [Member]
Payments Due by Year [Abstract]
2022	$ 12,000

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Long-Term Debt and Short-Term Borrowings, Fixed Rate Long-Term Debt (Details) - USD ($) $ in Thousands					12 Months Ended
	Sep. 30, 2020	Oct. 08, 2019	Oct. 01, 2019	Jan. 31, 2019	Dec. 31, 2020
3.24% Senior Notes, due 2050 [Member]
Long-Term Debt [Abstract]
Face value					$ 30,000
Interest rate					3.24%
Maturity date					Sep. 30, 2050
Proceeds from debt, net of issuance costs	$ 29,838
10.05% Senior Notes, Series C, due 2020 [Member]
Long-Term Debt [Abstract]
Face value	$ 6,500
Interest rate	10.05%				10.05%
Maturity date					Sep. 30, 2020
4.54% Senior Notes, due 2049 [Member]
Long-Term Debt [Abstract]
Face value				$ 20,000
Interest rate				4.54%	4.54%
Maturity date					Jan. 31, 2049
Proceeds from debt, net of issuance costs				$ 19,820
10.17% Series A Senior Notes and 9.60% Series B Senior Notes [Member]
Long-Term Debt [Abstract]
Face value				$ 11,000
10.17% Senior Notes, Series A, due 2019 [Member]
Long-Term Debt [Abstract]
Interest rate				10.17%
Maturity date					Feb. 01, 2019
9.60% Senior Notes, Series B, due 2019 [Member]
Long-Term Debt [Abstract]
Interest rate				9.60%
Maturity date					Feb. 01, 2019
3.23% Senior Notes, due 2040 [Member]
Long-Term Debt [Abstract]
Face value			$ 15,000
Interest rate			3.23%		3.23%
Maturity date					Oct. 01, 2040
Proceeds from debt, net of issuance costs			$ 14,888
5.00% Monthly Senior Notes, Series 2010A, due 2040 [Member]
Long-Term Debt [Abstract]
Face value			$ 15,000
Interest rate			5.00%
Maturity date					Oct. 01, 2040
3.00% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series A of 2019, due 2036 [Member]
Long-Term Debt [Abstract]
Face value		$ 10,500
Interest rate		3.00%			3.00%
Maturity date					Oct. 01, 2036
3.10% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series B of 2019, due 2038 [Member]
Long-Term Debt [Abstract]
Face value		$ 14,870
Interest rate		3.10%			3.10%
Maturity date					Nov. 01, 2038
Series A and Series B Bonds [Member]
Long-Term Debt [Abstract]
Proceeds from debt, net of issuance costs		$ 25,049
4.75% York County Industrial Development Authority Revenue Bonds, Series 2006, due 2036 [Member]
Long-Term Debt [Abstract]
Face value		$ 10,500
Interest rate		4.75%
Maturity date					Oct. 01, 2036
4.50% PEDFA Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038 [Member]
Long-Term Debt [Abstract]
Face value		$ 14,870
Interest rate		4.50%
Maturity date					Nov. 01, 2038

XML

Long-Term Debt and Short-Term Borrowings, Variable Rate Long-Term Debt (Details) - Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029 [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Variable Rate Long-Term Debt [Abstract]
Face value	$ 12,000
Maturity date	Oct. 01, 2029
Annual average variable interest rate	0.62%	1.50%
Variable interest rate at year end	0.12%	1.78%
Period in which to reimburse bank for purchase price of tendered bonds that have not been remarketed	14 months

XML

Long-Term Debt and Short-Term Borrowings, Interest Rate Swap Agreement (Details) - Interest Rate Swap [Member] - Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029 [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Interest Rate Swap Agreement [Abstract]
Notional amount of swap	$ 12,000
Potential payment to counterparty	$ 2,830
Fixed interest rate	3.16%
Net payment rate on swap	2.87%	1.84%
Interest rate spread	0.03%	0.75%
Overall effective rate, including variable interest and swap payments	3.19%	3.91%
LIBOR [Member]
Interest Rate Swap Agreement [Abstract]
Percentage of variable interest rate	59.00%
Term of variable rate	1 month

XML

Long-Term Debt and Short-Term Borrowings, Line of Credit Borrowings (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($) Bank
Line of Credit Facility [Abstract]
Borrowing capacity		$ 41,500
Number of banks in which unsecured line of credit maintained | Bank		4
Average borrowings outstanding	$ 7,467	$ 5,070
Weighted average cost of borrowings	1.59%	3.47%
Weighted average interest rate at year end	1.30%	2.92%
Committed Line of Credit, due 2022 [Member]
Line of Credit Facility [Abstract]
Borrowing capacity	$ 50,000
Committed Line of Credit, due 2022 [Member] | LIBOR [Member]
Line of Credit Facility [Abstract]
Basis adjustment	1.05%
Unsecured Line of Credit, First Note [Member]
Line of Credit Facility [Abstract]
Borrowing capacity		$ 13,000
Maturity period		2 years
Outstanding borrowings under line of credit		$ 3,672
Unsecured Line of Credit, First Note [Member] | LIBOR [Member]
Line of Credit Facility [Abstract]
Basis adjustment		1.20%
Unsecured Line of Credit, Second Note [Member]
Line of Credit Facility [Abstract]
Borrowing capacity		$ 11,000
Unsecured Line of Credit, Second Note [Member] | LIBOR [Member]
Line of Credit Facility [Abstract]
Basis adjustment		1.25%
Unsecured Line of Credit, Third Note [Member]
Line of Credit Facility [Abstract]
Borrowing capacity		$ 7,500
Outstanding borrowings under line of credit		$ 4,000
Unsecured Line of Credit, Third Note [Member] | LIBOR [Member]
Line of Credit Facility [Abstract]
Basis adjustment		1.15%
Unsecured Line of Credit, Fourth Note [Member]
Line of Credit Facility [Abstract]
Borrowing capacity		$ 10,000
Unsecured Line of Credit, Fourth Note [Member] | LIBOR [Member]
Line of Credit Facility [Abstract]
Basis adjustment		1.20%

XML

Long-Term Debt and Short-Term Borrowings, Debt Covenants and Restrictions (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
Long-Term Debt and Short-Term Borrowings [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

XML

Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
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	$ 99
Fair Value Measurements [Abstract]
Customers' advances for construction	10,326	$ 7,844
Note receivable	255	255
Fair Value on a Recurring Basis [Member]
Interest Rate Swap [Abstract]
Interest rate swap	2,731	2,248
Fair Value on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Interest Rate Swap [Abstract]
Interest rate swap	2,731	2,248
Carrying Amount [Member]
Fair Value, Financial Liabilities [Abstract]
Total long-term debt	126,570	104,042
Estimated Fair Value [Member]
Fair Value, Financial Liabilities [Abstract]
Total long-term debt	$ 151,000	$ 115,000

XML

Commitments (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) ServiceLine	Dec. 31, 2019 USD ($)
Commitments [Abstract]
Percentage of employees under union contract	33.00%
Company-Owned Lead Service Lines [Member]
Commitments [Abstract]
Term to replace all remaining company-owned lead service lines	4 years
Costs incurred to replace company-owned lead service lines	$ 2,740	$ 2,713
Customer-Owned Lead Service Lines [Member]
Commitments [Abstract]
Number of lead customer-owned service lines to be replaced annually | ServiceLine	400
Term of tariff modification to replace customer-owned lead service lines	9 years
Recovery period of regulatory asset	4 years
Costs incurred to replace customer-owned lead service lines	$ 1,204	$ 1,000
Costs to be incurred to replace customer-owned lead service lines	1,500
Construction and Acquisition Expenditures [Member]
Capital Commitments [Abstract]
Commitment for 2021	36,000
Commitment for 2022	$ 40,000

XML

Revenue (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) Municipality	Dec. 31, 2019 USD ($)
Revenue [Abstract]
Revenue from contracts with customers	$ 53,296	$ 51,059
Rents from regulated property	556	519
Total operating revenue	$ 53,852	51,578
Utility Service [Member]
Revenue [Abstract]
Number of days for customer to make payment after being invoiced	20 days
Water Utility Service [Member] | Residential [Member]
Revenue [Abstract]
Revenue from contracts with customers	$ 33,987	32,118
Water Utility Service [Member] | Commercial and Industrial [Member]
Revenue [Abstract]
Revenue from contracts with customers	13,764	14,161
Water Utility Service [Member] | Fire Protection [Member]
Revenue [Abstract]
Revenue from contracts with customers	3,191	3,074
Wastewater Utility Service [Member] | Residential [Member]
Revenue [Abstract]
Revenue from contracts with customers	1,746	1,291
Wastewater Utility Service [Member] | Commercial and Industrial [Member]
Revenue [Abstract]
Revenue from contracts with customers	304	280
Billing and Revenue Collection Services [Member]
Revenue [Abstract]
Revenue from contracts with customers	$ 266	70
Number of municipalities within the service territory provided service | Municipality	3
Number of days for customer to make payment after being invoiced	30 days
Collection Services [Member]
Revenue [Abstract]
Revenue from contracts with customers	$ 15	52
Number of days for customer to make payment after being invoiced	30 days
Other Revenue [Member]
Revenue [Abstract]
Revenue from contracts with customers	$ 23	$ 13

XML

Rate Matters (Details) - PPUC [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Rate Matters [Abstract]
Amount agreed to be returned to customers for effects of 2017 Tax Act	$ 2,117
Revenue recorded as regulatory liability for effects of 2017 Tax Act	(1)	$ (325)
Reclassification from excess accumulated deferred income taxes on accelerated depreciation	0	(27)
Negative surcharges returned to customers for effects of 2017 Tax Act	2,117
Rate Request Filed on May 30, 2018 [Member] | Water [Member]
Rate Matters [Abstract]
Requested increase in annual revenue	6,399
Authorized dollar increase in annual revenues from the PPUC	3,361
Rate Request Filed on May 30, 2018 [Member] | Wastewater [Member]
Rate Matters [Abstract]
Requested increase in annual revenue	289
Authorized dollar increase in annual revenues from the PPUC	289
DSIC [Member]
Rate Matters [Abstract]
Distribution system improvement charge revenue	$ 0	$ 249
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

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, 2020	Dec. 31, 2019
Employee Benefit Plans [Abstract]
Maximum period of eligible service	30 years
Change in Benefit Obligation [Abstract]
Pension benefit obligation, beginning of year	$ 47,530	$ 41,511
Service cost	938	849
Interest cost	1,457	1,645
Actuarial loss	6,165	5,241
Benefit payments	(1,984)	(1,716)
Pension benefit obligation, end of year	54,106	47,530
Change in Plan Assets [Abstract]
Fair value of plan assets, beginning of year	49,349	40,624
Actual return on plan assets	6,650	8,141
Employer contributions	2,300	2,300
Benefits paid	(1,984)	(1,716)
Fair value of plan assets, end of year	56,315	49,349
Funded status of plans at end of year	$ 2,209	$ 1,819
Change in discount rate	(0.80%)	(1.00%)
Threshold for amortization of gains and losses	10.00%
Changes in Plan Assets and Benefit Obligations Recognized in Regulatory Assets [Abstract]
Net gain (loss) arising during the period	$ 2,713	$ (167)
Recognized net actuarial loss	(370)	(421)
Recognized prior service credit	13	13
Total changes in regulatory asset during the year	2,356	(575)
Amounts Recognized in Regulatory Assets that Have Not Yet Been Recognized as Components of Net Periodic Benefit Cost [Abstract]
Net loss	10,497	8,154
Prior service credit	(63)	(76)
Regulatory asset	$ 10,434	$ 8,078

XML

Employee Benefit Plans, Components of Net Periodic Benefit Cost (Details) - Defined Benefit Pension Plans Combined [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Components of Net Periodic Benefit Cost [Abstract]
Service cost	$ 938	$ 849
Interest cost	1,457	1,645
Expected return on plan assets	(3,198)	(2,733)
Amortization of loss	370	421
Amortization of prior service credit	(13)	(13)
Rate-regulated adjustment	2,746	2,131
Net periodic benefit cost	2,300	$ 2,300
Change in defined benefit plan regulatory asset from pension contribution greater (less) than net periodic benefit cost	2,746
Amortization of Regulatory Assets to be Reclassified into Net Periodic Benefit Cost [Abstract]
Net loss	582
Net prior service credit	(13)
Total amortization of regulatory assets to be reclassified into net periodic benefit cost during the next fiscal year	$ 569

XML

Employee Benefit Plans, Benefit Payments Expected to be Paid (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Estimated Future Employer Contributions [Abstract]
Estimated employer contributions in 2021	$ 2,300
Defined Benefit Pension Plans Combined [Member]
Benefit Payments Expected to be Paid [Abstract]
2021	1,903
2022	1,984
2023	2,163
2024	2,224
2025	2,216
2026 - 2030	$ 12,472

XML

Employee Benefit Plans, Projected Benefit Obligation, Accumulated Benefit Obligation and Fair Value of Plan Assets (Details) - Defined Benefit Pension Plans Combined [Member] - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Projected Benefit Obligation and Fair Value of Plan Assets [Abstract]
Projected benefit obligation	$ 54,106	$ 47,530	$ 41,511
Fair value of plan assets	56,315	49,349	40,624
Accumulated Benefit Obligation and Fair Value of Plan Assets [Abstract]
Accumulated benefit obligation	50,578	44,587
Fair value of plan assets	$ 56,315	$ 49,349	$ 40,624

XML

Employee Benefit Plans, Weighted-Average Assumptions Used (Details) - Defined Benefit Pension Plans Combined [Member] - Stock	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Weighted-Average Assumptions Used to Determine Benefit Obligations [Abstract]
Discount rate	2.30%	3.10%
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost [Abstract]
Discount rate	3.10%	4.10%
Expected long-term return on plan assets	6.50%	6.50%
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	20
Minimum number of individual stocks that must be included in the international stock portfolio	30
Maximum fixed income securities holdings in any single issuer	5.00%
Minimum [Member]
Weighted-Average Assumptions Used to Determine Benefit Obligations [Abstract]
Rate of compensation increase	2.50%	2.50%
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost [Abstract]
Rate of compensation increase	2.50%	2.50%
Target Asset Allocations [Abstract]
Investment performance objectives benchmark period	3 years
Maximum equity securities holdings in any one industry	20.00%
Maximum [Member]
Weighted-Average Assumptions Used to Determine Benefit Obligations [Abstract]
Rate of compensation increase	3.00%	3.00%
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost [Abstract]
Rate of compensation increase	3.00%	3.00%
Target Asset Allocations [Abstract]
Investment performance objectives benchmark period	5 years
Maximum equity securities holdings in any one industry	25.00%
Equity Securities [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Asset allocation of plan assets	50.00%
Weighted-average target asset allocations	50.00%
Equity Securities [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Asset allocation of plan assets	70.00%
Weighted-average target asset allocations	70.00%
Large Cap [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	60.00%
Large Cap [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	95.00%
Mid Cap [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	0.00%
Mid Cap [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	25.00%
Small Cap [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	0.00%
Small Cap [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	10.00%
International Developed Nations [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	0.00%
International Developed Nations [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	25.00%
International Emerging Nations [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	0.00%
International Emerging Nations [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	10.00%
Fixed Income Securities [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Asset allocation of plan assets	30.00%
Weighted-average target asset allocations	30.00%
Fixed Income Securities [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Asset allocation of plan assets	50.00%
Weighted-average target asset allocations	50.00%
U.S. Treasuries [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	15.00%
U.S. Treasuries [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	55.00%
Federal Agency Securities [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	0.00%
Federal Agency Securities [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	22.00%
Corporate Bonds [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	0.00%
Corporate Bonds [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	40.00%
Mortgage-Backed Securities [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	15.00%
Mortgage-Backed Securities [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	55.00%
International [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	0.00%
International [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	20.00%
High Yield Bonds [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	0.00%
High Yield Bonds [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	20.00%
Cash and Cash Equivalents [Member] | Minimum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	0.00%
Cash and Cash Equivalents [Member] | Maximum [Member]
Target Asset Allocations [Abstract]
Weighted-average target asset allocations	10.00%

XML

Employee Benefit Plans, Fair Values of Pension Plan Assets (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Fair Value of Pension Plan Assets [Abstract]
Period to keep distributions in immediately available funds		1 year
Defined Benefit Pension Plans Combined [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets		$ 56,315	$ 49,349	$ 40,624
Defined Benefit Pension Plans Combined [Member] | Cash and Money Market Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[1]	624	682
Defined Benefit Pension Plans Combined [Member] | Common Equity Securities [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[2]	0	662
Defined Benefit Pension Plans Combined [Member] | Equity Mutual Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[3]	35,707	29,677
Defined Benefit Pension Plans Combined [Member] | U.S. Treasury Obligations [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets		631	615
Defined Benefit Pension Plans Combined [Member] | Corporate and Foreign Bonds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[4]	5,615	6,078
Defined Benefit Pension Plans Combined [Member] | Fixed Income Mutual Funds [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets	[5]	13,738	11,635
Defined Benefit Pension Plans Combined [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets		50,069	42,656
Defined Benefit Pension Plans Combined [Member] | 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]	624	682
Defined Benefit Pension Plans Combined [Member] | 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]	0	662
Defined Benefit Pension Plans Combined [Member] | 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]	35,707	29,677
Defined Benefit Pension Plans Combined [Member] | 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
Defined Benefit Pension Plans Combined [Member] | 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
Defined Benefit Pension Plans Combined [Member] | 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]	13,738	11,635
Defined Benefit Pension Plans Combined [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets		6,246	6,693
Defined Benefit Pension Plans Combined [Member] | 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
Defined Benefit Pension Plans Combined [Member] | 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
Defined Benefit Pension Plans Combined [Member] | 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
Defined Benefit Pension Plans Combined [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury Obligations [Member]
Fair Value of Pension Plan Assets [Abstract]
Fair value of plan assets		631	615
Defined Benefit Pension Plans Combined [Member] | 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]	5,615	6,078
Defined Benefit Pension Plans Combined [Member] | 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 up to one year of distributions in immediately available funds.

[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, telecommunications, industrials, real estate, materials, and energy. The individual stocks are primarily large cap stocks which track with the S&P 500.

[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, energy, transportation, 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.

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Employee Benefit Plans, Defined Contribution Plan, Deferred Compensation and Other (Details)	12 Months Ended
	Dec. 31, 2020 USD ($) Employee	Dec. 31, 2019 USD ($)
Defined Contribution Plan [Abstract]
Maximum elective employee contribution percentage	15.00%
Company matching contribution percentage	100.00%
Maximum annual Company contribution for each employee	$ 2,800
Maximum annual Company contribution as a percentage of employee's compensation	4.00%
Annual Company discretionary contribution	$ 1,200
Number of employees participating in enhanced feature of plan | Employee	56
Contributions to defined contribution plan	$ 313,000	$ 300,000
Deferred Compensation [Abstract]
Present value of future obligations	4,757,000	4,416,000
Total cash value of insurance policies	3,735,000	3,667,000
Net expenses under deferred compensation plans	585,000	670,000
Other [Abstract]
Amount payable upon retiree's death	2,000
Present value of future obligations	165,000	137,000
Expenses under retiree life insurance program	$ 38,000	$ 34,000

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Stock Based Compensation (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) Officer $ / shares shares	Dec. 31, 2018 Officer $ / shares shares	May 02, 2016 shares
Stock-Based Compensation [Abstract]
Number of retiring officers receiving accelerated vesting period | Officer		1	1
LTIP [Member]
Stock-Based Compensation [Abstract]
Maximum number of shares of common stock that can be issued under the plan (in shares)				100,000
Term of plan	10 years
Maximum number of shares of common stock subject to awards that may be granted to a participant per calendar year (in shares)	2,000
LTIP [Member] | Restricted Stock [Member]
Number of Shares [Roll Forward]
Nonvested at beginning of the year (in shares)	7,342	3,080
Granted (in shares)	4,912	6,963
Vested (in shares)	(5,491)	(2,701)
Forfeited (in shares)	(81)	0
Nonvested at end of the year (in shares)	6,682	7,342	3,080
Grant Date Weighted Average Fair Value [Abstract]
Nonvested at beginning of the year (in dollars per share) | $ / shares	$ 33.57	$ 33.85
Granted (in dollars per share) | $ / shares	44.07	33.61
Vested (in dollars per share) | $ / shares	36.00	33.99
Forfeited (in dollars per share) | $ / shares	33.61	0
Nonvested at end of the year (in dollars per share) | $ / shares	$ 39.30	$ 33.57	$ 33.85
Stock-Based Compensation Expense [Abstract]
Stock-based compensation expense | $	$ 154	$ 166
Recognized tax benefits related to stock-based compensation expense | $	45	48
Fair value of vested shares | $	198	$ 92
Stock-based compensation expense not yet recognized | $	$ 263
Period of recognition	3 years
LTIP [Member] | Restricted Stock [Member] | Officers and Key Employees [Member]
Stock-Based Compensation [Abstract]
Vesting period	3 years

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Taxes Other than Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Components of Taxes Other than Income Taxes [Abstract]
Regulatory assessment	$ 298	$ 285
Property	353	348
Payroll, net of amounts capitalized	551	564
Other	3	3
Total taxes other than income taxes	$ 1,205	$ 1,200

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Income Taxes (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) Position	Dec. 31, 2019 USD ($)	Dec. 31, 2017	Dec. 31, 2014 USD ($)
Provisions for Income Taxes [Abstract]
Federal current	$ 1,376	$ 1,148
State current	554	451
Federal deferred	247	475
State deferred	(120)	205
Federal investment tax credit, net of current utilization	(39)	(39)
Total income taxes	2,018	2,240
Reconciliation of Statutory Federal Tax Provision to Total Provision [Abstract]
Statutory Federal tax provision	3,909	3,495
State income taxes, net of Federal benefit	426	574
IRS TPR deduction	(1,979)	(1,642)
Tax-exempt interest	(29)	(25)
Amortization of investment tax credit	(39)	(39)
Cash value of life insurance	(110)	6
Amortization of excess accumulated deferred income taxes on accelerated depreciation	(182)	(149)
Other, net	22	20
Total income taxes	2,018	2,240
Regulatory Liabilities [Abstract]
Regulatory liabilities	$ 25,969	$ 25,399
Federal corporate tax rate	21.00%	21.00%	34.00%
Deferred Tax Assets [Abstract]
Reserve for doubtful accounts	$ 189	$ 88
Compensated absences	151	148
Deferred compensation	1,375	1,276
Excess accumulated deferred income taxes on accelerated depreciation	3,995	4,047
Deferred taxes associated with the gross-up of revenues necessary to return, in rates, the effect of temporary differences	2,456	2,104
Customers' advances for construction and contributions in aid of construction	1,815	998
Revenue reduction for tax rate change	0	7
Tax effect of pension regulatory liability	7	0
Other costs deducted for book, not for tax	64	69
Total deferred tax assets	10,052	8,737
Deferred Tax Liabilities [Abstract]
Accelerated depreciation	29,893	28,891
Basis differences from IRS TPR	13,671	11,311
Investment tax credit	356	384
Deferred taxes associated with the gross-up of revenues necessary to recover, in rates, the effect of temporary differences	8,088	6,987
Pensions	638	525
Tax effect of pension regulatory asset	0	106
Unamortized debt issuance costs	500	531
Other costs deducted for tax, not for book	444	428
Total deferred tax liabilities	53,590	49,163
Net deferred tax liability	43,538	40,426
Valuation allowance	0	0
Uncertain tax positions	$ 0
Open tax year	2017 2018 2019
Number of new tax positions taken | Position	0
Interest or penalties	$ 0	0
IRS TPR Catch-Up Deduction [Member]
Regulatory Liabilities [Abstract]
Regulatory liabilities	$ 3,412	3,671		$ 3,887
Approved amortization period	15 years
Amortization of catch-up deduction	$ (259)	(216)
IRS TPR Ongoing Deductions [Member]
Regulatory Liabilities [Abstract]
Ongoing TPR deduction	$ (1,720)	$ (1,426)

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Schedule II - Valuation and Qualifying Accounts (Details) - Reserve for Uncollectible Accounts [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Movement in Reserve [Roll Forward]
Balance at beginning of year	$ 305,000	$ 305,000
Additions - charged to cost and expenses	613,556	258,542
Additions - recoveries	54,653	51,900
Deductions	318,209	310,442
Balance at end of year	$ 655,000	$ 305,000