10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

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     0-422

MIDDLESEX WATER COMPANY

(Exact name of registrant as specified in its charter)

New Jersey (State of incorporation) 22-1114430 (IRS employer identification no.)

1500 Ronson Road, Iselin, New Jersey 08830

(Address of principal executive offices, including zip code)

(732) 634-1500

(Registrant's telephone number, including area code)

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 þ          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 during the preceding 12 months (or such shorter period that the registrant was required to submit and post files).

Yes þ          No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.

Large accelerated filer ¨      Accelerated filer þ      Non-accelerated filer ¨      Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨          No þ

The number of shares outstanding of each of the registrant's classes of common stock, as of October 31, 2014: Common Stock, No Par Value: 16,111,268 shares outstanding.

INDEX

PART I.	FINANCIAL INFORMATION	PAGE
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Statements of Income	1
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Cash Flows	3
	Condensed Consolidated Statements of Capital Stock and Long-Term Debt	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures of Market Risk	22
Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
SIGNATURES		25

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Operating Revenues	$	32,669		$	31,285		$	89,032		$	87,424
Operating Expenses:
Operations and Maintenance		14,956			15,120			44,957			45,698
Depreciation		2,880			2,772			8,532			8,205
Other Taxes		3,213			3,123			9,210			9,215
Total Operating Expenses		21,049			21,015			62,699			63,118
Operating Income		11,620			10,270			26,333			24,306
Other Income (Expense):
Allowance for Funds Used During Construction		80			104			213			230
Other Income		49			27			195			124
Other Expense		(44	)		(1	)		(218	)		(21	)
Total Other Income, net		85			130			190			333
Interest Charges		1,516			1,541			4,134			4,234
Income before Income Taxes		10,189			8,859			22,389			20,405
Income Taxes		3,431			3,052			7,735			6,940
Net Income		6,758			5,807			14,654			13,465
Preferred Stock Dividend Requirements		36			44			115			147
Earnings Applicable to Common Stock	$	6,722		$	5,763		$	14,539		$	13,318
Earnings per share of Common Stock:
Basic	$	0.42		$	0.36		$	0.91		$	0.84
Diluted	$	0.42		$	0.36		$	0.90		$	0.83
Average Number of
Common Shares Outstanding :
Basic		16,097			15,882			16,030			15,839
Diluted		16,253			16,117			16,211			16,093
Cash Dividends Paid per Common Share	$	0.1900		$	0.1875		$	0.5700		$	0.5625

See Notes to Condensed Consolidated Financial Statements.

1

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

		September 30,		December 31,
ASSETS		2014		2013
UTILITY PLANT:	Water Production	$	136,170	$	132,834
	Transmission and Distribution		366,966		359,931
	General		57,744		55,670
	Construction Work in Progress		11,142		8,410
	TOTAL		572,022		556,845
	Less Accumulated Depreciation		115,492		110,366
	UTILITY PLANT - NET		456,530		446,479
CURRENT ASSETS:	Cash and Cash Equivalents		5,052		4,834
	Accounts Receivable, net		11,153		11,640
	Unbilled Revenues		7,427		5,652
	Materials and Supplies (at average cost)		2,138		1,984
	Prepayments		2,981		1,728
	TOTAL CURRENT ASSETS		28,751		25,838
DEFERRED CHARGES	Unamortized Debt Expense		3,451		3,526
AND OTHER ASSETS:	Preliminary Survey and Investigation Charges		2,781		4,728
	Regulatory Assets		34,023		34,386
	Operations Contracts, Developer and Other Receivables		3,587		2,744
	Restricted Cash		3,438		2,473
	Non-utility Assets - Net		9,254		9,440
	Other		683		727
	TOTAL DEFERRED CHARGES AND OTHER ASSETS		57,217		58,024
	TOTAL ASSETS	$	542,498	$	530,341
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:	Common Stock, No Par Value	$	148,186	$	146,185
	Retained Earnings		47,977		42,560
	TOTAL COMMON EQUITY		196,163		188,745
	Preferred Stock		2,436		2,886
	Long-term Debt		129,170		129,798
	TOTAL CAPITALIZATION		327,769		321,429
CURRENT	Current Portion of Long-term Debt		5,634		5,386
LIABILITIES:	Notes Payable		30,500		28,450
	Accounts Payable		7,193		6,328
	Accrued Taxes		10,563		8,132
	Accrued Interest		431		1,151
	Unearned Revenues and Advanced Service Fees		852		837
	Other		1,518		2,394
	TOTAL CURRENT LIABILITIES		56,691		52,678
COMMITMENTS AND CONTINGENT LIABILITIES (Note 7)
DEFERRED CREDITS	Customer Advances for Construction		21,336		21,837
AND OTHER LIABILITIES:	Accumulated Deferred Investment Tax Credits		930		989
	Accumulated Deferred Income Taxes		41,254		39,110
	Employee Benefit Plans		18,708		21,335
	Regulatory Liability - Cost of Utility Plant Removal		10,044		9,639
	Other		1,322		1,348
	TOTAL DEFERRED CREDITS AND OTHER LIABILITIES		93,594		94,258
CONTRIBUTIONS IN AID OF CONSTRUCTION			64,444		61,976
	TOTAL CAPITALIZATION AND LIABILITIES	$	542,498	$	530,341

See Notes to Condensed Consolidated Financial Statements.

2

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Nine Months Ended September 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	14,654		$	13,465
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization		9,091			8,833
Provision for Deferred Income Taxes and Investment Tax Credits		2,107			2,536
Equity Portion of Allowance for Funds Used During Construction (AFUDC)		(138	)		(149	)
Cash Surrender Value of Life Insurance		(81	)		(174	)
Stock Compensation Expense		430			357
Changes in Assets and Liabilities:
Accounts Receivable		687			135
Unbilled Revenues		(1,775	)		(1,510	)
Materials & Supplies		(154	)		(585	)
Prepayments		(1,253	)		(436	)
Accounts Payable		867			566
Accrued Taxes		2,431			(42	)
Accrued Interest		(720	)		(513	)
Employee Benefit Plans		(2,720	)		(1,033	)
Unearned Revenue and Advanced Service Fees		15			(1	)
Other Assets and Liabilities		(1,002	)		(284	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		22,439			21,165
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures, Including AFUDC of $75 in 2014, $81 in 2013		(15,783	)		(14,585	)
Restricted Cash		(965	)		(360	)
Distribution From / (Investment in) Joint Venture		782			(1,205	)
NET CASH USED IN INVESTING ACTIVITIES		(15,966	)		(16,150	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt		(4,678	)		(10,440	)
Proceeds from Issuance of Long-term Debt		4,398			3,987
Net Short-term Bank Borrowings		2,050			2,500
Deferred Debt Issuance Expense		(69	)		(55	)
Restricted Cash		—			6,070
Proceeds from Issuance of Common Stock		1,120			1,257
Payment of Common Dividends		(9,130	)		(8,902	)
Payment of Preferred Dividends		(115	)		(147	)
Construction Advances and Contributions-Net		169			627
NET CASH USED IN  FINANCING ACTIVITIES		(6,255	)		(5,103	)
NET CHANGES IN CASH AND CASH EQUIVALENTS		218			(88	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		4,834			3,025
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	5,052		$	2,937
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Utility Plant received as Construction Advances and Contributions	$	1,797		$	1,324
Long-term Debt Deobligation	$	—		$	64
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Year for:
Interest	$	4,971		$	4,875
Interest Capitalized	$	75		$	81
Income Taxes	$	3,775		$	5,169

See Notes to Condensed Consolidated Financial Statements.

3

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CAPITAL STOCK

AND LONG-TERM DEBT

(Unaudited)

(In thousands)

	September 30,			December 31,
	2014			2013
Common Stock, No Par Value
Shares Authorized -    40,000
Shares Outstanding -  2014 - 16,107	$	148,186		$	146,185
2013 - 15,963
Retained Earnings		47,977			42,560
TOTAL COMMON EQUITY	$	196,163		$	188,745
Cumulative Preferred Stock, No Par Value:
Shares Authorized -     130
Shares Outstanding -   24 - 2014; 28 - 2013
Convertible:
Shares Outstanding, $7.00 Series - 10 - 2014; 14 - 2013		1,007			1,457
Shares Outstanding, $8.00 Series - 3		349			349
Nonredeemable:
Shares Outstanding, $7.00 Series -   1		80			80
Shares Outstanding, $4.75 Series - 10		1,000			1,000
TOTAL PREFERRED STOCK	$	2,436		$	2,886
Long-term Debt:
8.05%, Amortizing Secured Note, due December 20, 2021	$	1,872		$	2,005
6.25%, Amortizing Secured Note, due May 19, 2028		5,740			6,055
6.44%, Amortizing Secured Note, due August 25, 2030		4,457			4,667
6.46%, Amortizing Secured Note, due September 19, 2031		4,737			4,947
4.22%, State Revolving Trust Note, due December 31, 2022		443			465
3.60%, State Revolving Trust Note, due May 1, 2025		2,559			2,654
3.30% State Revolving Trust Note, due March 1, 2026		506			541
3.49%, State Revolving Trust Note, due January 25, 2027		536			569
4.03%, State Revolving Trust Note, due December 1, 2026		720			742
4.00% to 5.00%, State Revolving Trust Bond, due August 1, 2021		299			343
0.00%, State Revolving Fund Bond, due August 1, 2021		241			281
3.64%, State Revolving Trust Note, due July 1, 2028		322			330
3.64%, State Revolving Trust Note, due January 1, 2028		107			110
3.45%, State Revolving Trust Note, due August 1, 2031		1,115			467
6.59%, Amortizing Secured Note, due April 20, 2029		5,087			5,348
7.05%, Amortizing Secured Note, due January 20, 2030		3,833			4,021
5.69%, Amortizing Secured Note, due January 20, 2030		7,863			8,248
3.75%, State Revolving Trust Note, due July 1, 2031		2,463			2,515
3.75%, State Revolving Trust Note, due November 30, 2030		1,304			1,333
First Mortgage Bonds:
0.00%, Series X, due September 1, 2018		215			268
4.25% to 4.63%, Series Y, due September 1, 2018		245			300
0.00%, Series Z, due September 1, 2019		559			671
5.25% to 5.75%, Series AA, due September 1, 2019		700			830
0.00%, Series BB, due September 1, 2021		845			965
4.00% to 5.00%, Series CC, due September 1, 2021		1,025			1,145
0.00%, Series EE, due August 1, 2023		3,550			3,968
3.00% to 5.50%, Series FF, due August 1, 2024		4,900			5,335
0.00%, Series GG, due August 1, 2026		1,083			1,171
4.00% to 5.00%, Series HH, due August 1, 2026		1,390			1,475
0.00%, Series II, due August 1, 2024		881			971
3.40% to 5.00%, Series JJ, due August 1, 2027		1,090			1,165
0.00%, Series KK, due August 1, 2028		1,255			1,346
5.00% to 5.50%, Series LL, due August 1, 2028		1,435			1,505
0.00%, Series MM, due August 1, 2030		1,537			1,637
3.00% to 4.375%, Series NN, due August 1, 2030		1,755			1,835
0.00%, Series OO, due August 1, 2031		2,559			2,709
2.00% to 5.00%, Series PP, due August 1, 2031		850			885
5.00%, Series QQ, due October 1, 2023		9,915			9,915
3.80%, Series RR, due October 1, 2038		22,500			22,500
4.25%, Series SS, due October 1, 2047		23,000			23,000
0.00%, Series TT, due August 1, 2032		2,709			2,860
3.00% to 3.25%, Series UU, due August 1, 2032		975			1,015
0.00%, Series VV, due August 1, 2033		2,720			—
3.00% to 5.00%, Series WW, due August 1, 2033		935			—
SUBTOTAL LONG-TERM DEBT		132,832			133,112
Add: Premium on Issuance of Long-term Debt		1,972			2,072
Less: Current Portion of Long-term Debt		(5,634	)		(5,386	)
TOTAL LONG-TERM DEBT	$	129,170		$	129,798

See Notes to Condensed Consolidated Financial Statements.

4

MIDDLESEX WATER COMPANY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation and Recent Developments

Middlesex Water Company (Middlesex or the Company) is the parent company and sole shareholder of Tidewater Utilities, Inc. (Tidewater), Tidewater Environmental Services, Inc. (TESI), Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), Utility Service Affiliates, Inc. (USA), Utility Service Affiliates  (Perth Amboy) Inc. (USA-PA), and Twin Lakes Utilities, Inc. (Twin Lakes). Southern Shores Water Company, LLC (Southern Shores) and White Marsh Environmental Systems, Inc. (White Marsh) are wholly-owned subsidiaries of Tidewater. The financial statements for Middlesex and its wholly-owned subsidiaries (the Company) are reported on a consolidated basis. All significant intercompany accounts and transactions have been eliminated.

The consolidated notes within the 2013 Annual Report on Form 10-K (the 2013 Form 10-K) are applicable to these financial statements and, in the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (including normal recurring accruals) to present fairly the financial position as of September 30, 2014, the results of operations for the three month and nine month periods ended September 30, 2014, and 2013 and cash flows for the nine month periods ended September 30, 2014, and 2013. Information included in the Condensed Consolidated Balance Sheet as of December 31, 2013, has been derived from the Company’s audited financial statements for the year ended December 31, 2013 included in the 2013 Form 10-K. These condensed financial statements should be read in conjunction with the financial statements and notes included in the Company’s 2013 Form 10-K.

Recent Accounting Guidance

In May 2014, the Financial Accounting Standards Board issued an update to authoritative guidance related to revenue from contracts with customers. The update replaces most of the existing guidance with a single set of principles for recognizing revenue from contracts with customers. The guidance will be effective for the Company beginning January 1, 2017. Early adoption is not permitted. The new guidance must be applied retrospectively to each prior period presented or retrospectively via a cumulative effect upon the date of initial application. We are currently evaluating the impact that the adoption will have on our consolidated financial statements and related disclosures.

There is no additional new adopted or proposed accounting guidance that could have a material impact on the Company’s financial statements.

Note 2 – Rate and Regulatory Matters

Middlesex – In June 2014, Middlesex’s application with the New Jersey Board of Public Utilities (NJBPU) seeking permission to increase base water rates was partially approved, granting an increase in annual operating revenues of $4.2 million. The originally-filed base water rate increase request of $10.6 million, filed in November 2013 (subsequently revised to $8.1 million, primarily resulting from lower employee benefit plan costs), was necessitated by capital investments Middlesex had made, or committed to make, increased operations and maintenance costs and lost revenues resulting from the ending of a wholesale water sales contract with the Borough of Sayreville, New Jersey in August 2013 and Middlesex’s largest retail water customer, Hess Corporation, ceasing its oil refining operations at its Port Reading, New Jersey facility in February 2013. The new base water rates are designed to recover the increased costs, lost revenues, as well as a return on invested capital in rate base of $208.6 million based on a return on equity of 9.75%. The rate increase became effective on July 20, 2014.

In May 2014, Middlesex filed a petition with the NJBPU seeking approval of foundational information (Foundational Filing) that would allow for the implementation of a Distribution System Improvement Charge (DSIC). A DSIC is a rate-mechanism that allows water utilities to recover investment in capital improvements to their water distribution system made between base rate proceedings.  In August 2014, the Foundational Filing was approved by the NJBPU, which allows Middlesex to implement a DSIC rate in September 2014 to recover costs for qualifying projects that are placed in service in the six-month post-approval period.  The DSIC rate is allowed to increase in three subsequent six month periods for any additional qualifying projects placed in service during those time periods. The maximum annual revenue allowed to be recovered under the approved Foundational Filing is $3.6 million.

5

Tidewater – The Delaware Public Service Commission (DEPSC) approved a $0.8 million increase in Tidewater’s annual base water rates, effective August 19, 2014. The originally-filed base water rate increase request of $3.9 million, filed in November 2013 (subsequently revised to $2.5 million, primarily resulting from lower employee benefit plan costs), was necessitated by capital investments Tidewater had made, or committed to make, as well as increased operations and maintenance costs. In connection with the rate increase application, Tidewater implemented a DEPSC approved 6.5% interim rate increase, subject to refund, on February 6, 2014. Since the final approved rate increase was less than the interim rate increase, Tidewater refunded $0.4 million of previously deferred revenues to customers in the form of a one-time credit to each customer account.

In April 2014, the DEPSC approved Tidewater’s agreement with the United States Department of Defense for the privatization of the water system of Dover Air Force Base (DAFB) in Dover, Delaware. On October 1, 2014, Tidewater began providing DAFB with potable water service. Based on the recently implemented DEPSC-approved Tidewater base water rate increase, service to DAFB is expected to generate approximately $0.6 million of revenue annually.

TESI - The DEPSC approved an April 2014 request by TESI to relinquish its Certificate of Public Necessity and Convenience (“CPCN”) for a real estate parcel in Sussex County, Delaware. This approval allowed for a companion transaction to be completed, whereby TESI was reimbursed with a combination of cash and a future receivable by a real estate developer for $1.9 million of Preliminary Survey and Investigation Costs incurred in connection with the CPCN. TESI recognized a gain of less than $0.1 million from this transaction.

Note 3 – Capitalization

Common Stock

During the nine months ended September 30, 2014 and 2013, there were 54,627 common shares (approximately $1.1 million) and 63,649 common shares (approximately $1.3 million), respectively, issued under the Company’s Amended and Restated Dividend Reinvestment and Common Stock Purchase Plan.

For the nine months ended September 30, 2014, 4,293 shares (approximately $0.5 million) of the Company’s no par $7.00 Series Cumulative and Convertible Preferred Stock were converted into 51,516 shares of common stock.

Long-term Debt

In May 2014, Middlesex borrowed approximately $3.8 million through the New Jersey Environmental Infrastructure Trust under the New Jersey State Revolving Fund (SRF) loan program and issued first mortgage bonds designated as Series VV (approximately $2.8 million) and Series WW ( approximately $0.9 million). The interest rate on the Series VV bond is zero and the interest rate on the Series WW bond ranges from 3.0% to 5.0% depending on the serial maturity date. The final maturity date for both bonds is August 1, 2033. Proceeds were recorded as Restricted Cash and may only be used for the Middlesex 2014 RENEW project, which is part of a program to clean and cement all unlined mains in the Middlesex system.

In October 2014, Tidewater closed on a $15.0 million DEPSC-approved loan. Tidewater can borrow the $15.0 million in whole or in increments at its discretion until April 30, 2015, at an interest rate based on market conditions at the time of borrowing with a maximum final maturity date of April 1, 2040. Proceeds from the loan will be used to retire short-term borrowings and also fund Tidewater’s ongoing capital program.

6

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments for which it is practicable to estimate that value. The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade receivables, accounts payable and notes payable approximate their respective fair values due to the short-term maturities of these instruments. The fair value of the Company’s long-term debt relating to First Mortgage and SRF Bonds (Bonds) is based on quoted market prices for similar issues. Under the fair value hierarchy, the fair value of cash and cash equivalents is classified as a Level 1 measurement and the fair value of the Bonds in the table below are classified as Level 2 measurements.

The carrying amount and fair value of the Company’s bonds were as follows:

	September 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
First Mortgage Bonds	$	88,628	$	88,532	$	87,471	$	79,733
SRF Bonds	$	540	$	542	$	625	$	628

For other long-term debt for which there was no quoted market price and there is not an active trading market, it was not practicable to estimate their fair value (for details, including carrying value, interest rate and due date on these series of long-term debt, please refer to those series noted as “Amortizing Secured Note” and “State Revolving Trust Note” on the Condensed Consolidated Statements of Capital Stock and Long-Term Debt). The carrying amount of these instruments was $43.7 million at September 30, 2014 and $45.0 million at December 31, 2013. Customer advances for construction have carrying amounts of $21.3 million and $21.8 million, respectively, at September 30, 2014 and December 31, 2013. Their relative fair values cannot be accurately estimated since future refund payments depend on several variables, including new customer connections, customer consumption levels and future rate increases.

Note 4 – Earnings Per Share

Basic earnings per share (EPS) are computed on the basis of the weighted average number of shares outstanding during the period presented. Diluted EPS assumes the conversion of both the Convertible Preferred Stock $7.00 Series and the Convertible Preferred Stock $8.00 Series.

	Three Months Ended September 30,
	2014					2013
Basic:	Income			Shares		Income			Shares
Net Income	$	6,758			16,097	$	5,807			15,882
Preferred Dividend		(36	)				(44	)
Earnings Applicable to Common Stock	$	6,722			16,097	$	5,763			15,882
Basic EPS	$	0.42				$	0.36
Diluted:
Earnings Applicable to Common Stock	$	6,722			16,097	$	5,763			15,882
$7.00 Series Preferred Dividend		17			115		24			167
$8.00 Series Preferred Dividend		6			41		6			68
Adjusted Earnings Applicable to  Common Stock	$	6,745			16,253	$	5,793			16,117
Diluted EPS	$	0.42				$	0.36

7

	(In Thousands Except per Share Amounts)
	Nine Months Ended September 30,
	2014					2013
Basic:	Income			Shares		Income			Shares
Net Income	$	14,654			16,030	$	13,465			15,839
Preferred Dividend		(115	)				(147	)
Earnings Applicable to Common Stock	$	14,539			16,030	$	13,318			15,839
Basic EPS	$	0.91				$	0.84
Diluted:
Earnings Applicable to Common Stock	$	14,539			16,030	$	13,318			15,839
$7.00 Series Preferred Dividend		57			140		73			167
$8.00 Series Preferred Dividend		18			41		34			87
Adjusted Earnings Applicable to  Common Stock	$	14,614			16,211	$	13,425			16,093
Diluted EPS	$	0.90				$	0.83

Note 5 – Business Segment Data

The Company has identified two reportable segments. One is the regulated business of collecting, treating and distributing water on a retail and wholesale basis to residential, commercial, industrial and fire protection customers in parts of New Jersey, Delaware and Pennsylvania. This segment also includes regulated wastewater systems in New Jersey and Delaware. The Company is subject to regulations as to its rates, services and other matters by New Jersey, Delaware and Pennsylvania with respect to utility services within these states. The other segment is primarily comprised of non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware. Inter-segment transactions relating to operational costs are treated as pass-through expenses. Finance charges on inter-segment loan activities are based on interest rates that are below what would normally be charged by a third party lender.

8

	(In Thousands)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Operations by Segments:	2014			2013			2014			2013
Revenues:
Regulated	$	29,346		$	27,981		$	78,719		$	77,042
Non – Regulated		3,492			3,470			10,752			10,787
Inter-segment Elimination		(169	)		(166	)		(439	)		(405	)
Consolidated Revenues	$	32,669		$	31,285		$	89,032		$	87,424
Operating Income:
Regulated	$	11,039		$	9,685		$	24,585		$	22,699
Non – Regulated		581			585			1,748			1,607
Consolidated Operating Income	$	11,620		$	10,270		$	26,333		$	24,306
Net Income:
Regulated	$	6,458		$	5,505		$	13,753		$	12,648
Non – Regulated		300			302			901			817
Consolidated Net Income	$	6,758		$	5,807		$	14,654		$	13,465
Capital Expenditures:
Regulated	$	7,211		$	4,313		$	15,685		$	14,417
Non – Regulated		67			50			98			168
Total Capital Expenditures	$	7,278		$	4,363		$	15,783		$	14,585

	As of			As of
	September 30,			December 31,
	2014			2013
Assets:
Regulated	$	540,970		$	529,381
Non – Regulated		8,262			8,887
Inter-segment Elimination		(6,734	)		(7,927	)
Consolidated Assets	$	542,498		$	530,341

Note 6 – Short-term Borrowings

As of September 30, 2014, the Company has established lines of credit aggregating $60.0 million. At September 30, 2014, the outstanding borrowings under these credit lines were $30.5 million at a weighted average interest rate of 1.47%.

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The weighted average daily amounts of borrowings outstanding under the Company’s credit lines and the weighted average interest rates on those amounts were as follows:

	(In Thousands)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Average Daily Amounts Outstanding	$	28,832	$	28,608	$	27,906	$	27,472
Weighted Average Interest Rates		1.44%		1.32%		1.44%		1.35%

The maturity dates for the $30.5 million outstanding as of September 30, 2014 are all in October 2014 and are extendable at the discretion of the Company.

Interest rates for short-term borrowings under the lines of credit are below the prime rate with no requirement for compensating balances.

Note 7 – Commitments and Contingent Liabilities

Water Supply

Middlesex has an agreement with the New Jersey Water Supply Authority (NJWSA) for the purchase of untreated water through November 30, 2023, which provides for an average purchase of 27 million gallons a day (mgd). Pricing is set annually by the NJWSA through a public rate making process. The agreement has provisions for additional pricing in the event Middlesex overdrafts or exceeds certain monthly and annual thresholds.

Middlesex also has an agreement with a non-affiliated regulated water utility for the purchase of treated water. This agreement, which expires February 27, 2016, provides for the minimum purchase of 3 mgd of treated water with provisions for additional purchases.

Purchased water costs are shown below:

	(In Thousands)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Treated	$	764	$	780	$	2,344	$	2,303
Untreated		642		618		1,763		1,739
Total Costs	$	1,406	$	1,398	$	4,107	$	4,042

Contract Operations - USA-PA operates the City of Perth Amboy, New Jersey’s water and wastewater systems under a 20-year agreement, which expires in 2018. In connection with the agreement with Perth Amboy, USA-PA entered into a 20-year subcontract with a wastewater operating company for the operation and maintenance of the Perth Amboy wastewater collection system. The subcontract provides for the sharing of certain fixed and variable fees and operating expenses.

Guarantees - In September 2013, Middlesex entered into agreements with Applied Water Management, Inc. (AWM), Natural Systems Utilities, LLC (NSU), the parent company of AWM, and the County of Monmouth, New Jersey (Monmouth County) for the design, construction and operation of a leachate pretreatment facility at the Monmouth County Reclamation Center in Tinton Falls, New Jersey. Under the terms of the agreements, AWM will obtain permits, design, build and operate the landfill leachate pretreatment facility and Middlesex will serve in the role of guarantor of AWM's performance on the project, in addition to providing operational support. Construction of the facility is being financed by Monmouth County and began in September 2014. Middlesex expects to act as guarantor of AWM’s performance through at least August 2018 and is contractually obligated to act as guarantor of AWM’s performance through 2028 unless another guarantor, acceptable to Monmouth County, is identified.  Under agreements with AWM and NSU, Middlesex earns a fee for providing the guaranty of AWM’s performance to Monmouth County, and AWM and NSU, serving as guarantor to Middlesex with respect to the performance of AWM, indemnify Middlesex against any claims that may arise under the Middlesex guaranty to Monmouth County.

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Middlesex believes it is unlikely any payments would need to be made under Middlesex’s guaranty of AWM’s performance to Monmouth County. If asked to perform under the guaranty to Monmouth County, and, if AWM and NSU, as guarantor to Middlesex, do not fulfill their obligations to indemnify Middlesex against any claims that may arise under the Middlesex guaranty to Monmouth County, Middlesex would be required to fulfill the construction and operational commitments of AWM. As of September 30, 2014, and December 31, 2013, the liability recognized in Other Non-Current Liabilities on the balance sheet for the guaranty is approximately $0.3 million and $0.4 million, respectively.

Construction

The Company expects to spend approximately $26.6 million for its construction program in 2014. The actual timing and amount of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain projects.

Litigation

The Company is a defendant in lawsuits in the normal course of business. We believe the resolution of pending claims and legal proceedings will not have a material adverse effect on the Company’s consolidated financial statements.

Change in Control Agreements

The Company has Change in Control Agreements with certain of its officers that provide compensation and benefits in the event of termination of employment in connection with a change in control of the Company.

Note 8 – Employee Benefit Plans

Pension Benefits

The Company maintains a defined benefit pension plan (Pension Plan) which covers all active employees hired prior to March 31, 2007. Employees hired after March 31, 2007 are not eligible to participate in this plan, but do participate in a defined contribution plan that provides a discretionary annual contribution into a self-directed retirement account based upon a percentage of the participants’ base compensation. In order to be eligible for contribution, the participating employee must be employed by the Company on December 31st of the year to which the award relates. For the three months ended September 30, 2014 and 2013, the Company made cash contributions to the Pension Plan of $1.3 million and $1.9 million, respectively. For the nine months ended September 30, 2014 and 2013, the Company made cash contributions to the Pension Plan of $2.5 million and $2.6 million, respectively. The Company expects to make additional cash contributions to the Pension Plan of approximately $0.8 million over the remainder of the current year. The Company also maintains an unfunded supplemental retirement benefit plan for certain active and retired Company officers and currently pays $0.3 million in annual benefits to the retired participants.

Other Postretirement Benefits

The Company maintains a postretirement plan other than pensions (Other Benefits Plan) which covers substantially all of its retired employees. Employees hired after March 31, 2007 are not eligible to participate in this plan. Coverage includes healthcare and life insurance. For the three months ended September 30, 2014 and 2013, the Company made cash contributions to the Other Benefits Plan of $0.5 million and $1.0 million, respectively. For the nine months ended September 30, 2014 and 2013, the Company made cash contributions to the Other Benefits Plan of $0.9 million and $1.7 million, respectively. The Company expects to make additional cash contributions to the Other Benefits Plan of approximately $0.3 million over the remainder of the current year.

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The following tables set forth information relating to the Company’s periodic costs for its employee retirement benefit plans:

	(In Thousands)
	Pension Benefits						Other Benefits
	Three Months Ended September 30,
	2014			2013			2014			2013
Service Cost	$	473		$	575		$	258		$	334
Interest Cost		670			617			448			399
Expected Return on Assets		(883	)		(724	)		(484	)		(406	)
Amortization of Unrecognized Losses		104			408			353			516
Amortization of Unrecognized Prior Service Cost (Credit)		1			2			(432	)		(432	)
Net Periodic Benefit Cost	$	365		$	878		$	143		$	411

	(In Thousands)
	Pension Benefits						Other Benefits
	Nine Months Ended September 30,
	2014			2013			2014			2013
Service Cost	$	1,420		$	1,725		$	774		$	1,003
Interest Cost		2,011			1,851			1,344			1,196
Expected Return on Assets		(2,650	)		(2,171	)		(1,453	)		(1,217	)
Amortization of Unrecognized Losses		312			1,224			1,060			1,549
Amortization of Unrecognized Prior Service Cost (Credit)		2			7			(1,296	)		(1,296	)
Net Periodic Benefit Cost	$	1,095		$	2,636		$	429		$	1,235

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Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements of Middlesex Water Company (Middlesex or the Company) included elsewhere herein and with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Forward-Looking Statements

Certain statements contained in this periodic report and in the 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. The Company intends that these statements be covered by the safe harbors created under those laws.  These statements include, but are not limited to:

- statements as to expected financial condition, performance, prospects and earnings of the Company;

- statements regarding strategic plans for growth;

- statements regarding the amount and timing of rate increases and other regulatory matters, including the recovery of certain costs recorded as regulatory assets;

- statements as to the Company’s expected liquidity needs during the upcoming fiscal year and beyond and statements as to the sources and availability of funds to meet its liquidity needs;

- statements as to expected customer rates, consumption volumes, service fees, revenues, margins, expenses and operating results;

- statements as to financial projections;

- statements as to the expected amount of cash contributions to fund the Company’s retirement benefit plans, anticipated discount rates and rates of return on retirement benefit plan assets;

- statements as to the ability of the Company to pay dividends;

- statements as to the Company’s compliance with environmental laws and regulations and estimations of the materiality of any related costs;

- statements as to the safety and reliability of the Company’s equipment, facilities and operations;

- statements as to the Company’s plans to renew municipal franchises and consents in the territories it serves;

- statements as to trends; and

- statements regarding the availability and quality of our water supply.

These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from anticipated results and outcomes include, but are not limited to:

- the effects of general economic conditions;

- increases in competition in the markets served by the Company;

- the ability of the Company to control operating expenses and to achieve efficiencies in its operations;

- the availability of adequate supplies of water;

- actions taken by government regulators, including decisions on rate increase requests;

- new or additional water quality standards;

- weather variations and other natural phenomena;

- pursuit and integration of acquisitions of projects, systems or contracts that do not meet operational and/or financial expectations;

- acts of war or terrorism;

- cyber security incidents or failure of information technology systems;

- the pace of housing development in our regulated franchise areas and the resulting impact on customer growth;

- the availability and cost of capital resources;

- the ability to translate Preliminary Survey & Investigation charges into active projects; and

- other factors discussed elsewhere in this quarterly report.

Many of these factors are beyond the Company’s ability to control or predict. Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements, which only speak to the Company’s understanding as of the date of this report. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

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For an additional discussion of factors that may affect the Company’s business and results of operations, see Item 1A. - Risk Factors in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Overview

Middlesex Water Company (Middlesex) has operated as a water utility in New Jersey since 1897, in Delaware through our wholly-owned subsidiary, Tidewater Utilities, Inc. (Tidewater), since 1992 and in Pennsylvania through our wholly-owned subsidiary, Twin Lakes Utilities, Inc. (Twin Lakes), since 2009. We are in the business of collecting, treating and distributing water for domestic, commercial, municipal, industrial and fire protection purposes. We also operate two New Jersey municipal water and wastewater systems under contract and provide regulated wastewater services in New Jersey and Delaware through our subsidiaries. We are regulated as to rates charged to customers for water and wastewater services, as to the quality of water service we provide and as to certain other matters in New Jersey, Delaware and Pennsylvania. Only our Utility Service Affiliates, Inc. (USA), Utility Service Affiliates (Perth Amboy), Inc. (USA-PA) and White Marsh Environmental Services, Inc. (White Marsh) subsidiaries are not regulated utilities.

Our New Jersey water utility system (the Middlesex System) provides water services to approximately 61,000 retail customers, primarily in central New Jersey. The Middlesex System also provides water service under contract to municipalities in central New Jersey with a total population of approximately 219,000. Our Bayview subsidiary provides water services in Downe Township, New Jersey. Our other New Jersey subsidiaries, Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), provide water and wastewater services to residents in Southampton Township, New Jersey.

We have an investment in a joint venture, Ridgewood Green RME, LLC, that owns and operates facilities to optimize the production of electricity at the Village of Ridgewood, New Jersey wastewater treatment plant and other municipal facilities.

In partnership with our subsidiary, USA-PA, we operate the water supply and distribution systems and wastewater system for the City of Perth Amboy, New Jersey (Perth Amboy).

USA offers residential customers in New Jersey and Delaware water service line and sewer lateral maintenance programs (LineCare). USA entered into a marketing agreement (the Agreement), expiring in 2021, with HomeServe USA (HomeServe), a leading provider of home maintenance service programs to service, develop and grow USA’s LineCare customer base. USA receives a service fee for the billing, cash collection and other administrative matters associated with HomeServe’s service contracts. USA also operates the Borough of Avalon, New Jersey’s (Avalon) water utility, sewer utility and storm water system. In addition to performing the day to day operations, USA is responsible for billing, collections, customer service, emergency responses and management of capital projects funded by Avalon. USA also provides unregulated water and wastewater services under contract with several New Jersey municipalities.

Our Delaware subsidiaries, Tidewater and Southern Shores Water Company, LLC (Southern Shores), provide water services to approximately 39,000 retail customers in New Castle, Kent and Sussex Counties, Delaware. Tidewater’s subsidiary, White Marsh, services an additional 3,500 customers in Kent and Sussex Counties through various operations and maintenance contracts.

Our Tidewater Environmental Services, Inc. (TESI) subsidiary provides wastewater services to approximately 3,200 residential retail customers.

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Our Pennsylvania subsidiary, Twin Lakes, provides water services to approximately 120 retail customers in the Township of Shohola, Pike County, Pennsylvania.

The majority of our revenue is generated from retail and contract water services to customers in our service areas. We record water service revenue as such service is rendered and include estimates for amounts unbilled at the end of the period for services provided after the last billing cycle. Fixed service charges are billed in advance by our subsidiary, Tidewater, and are recognized in revenue as the service is provided.

Our ability to increase operating income and net income is based significantly on four factors: weather, adequate and timely rate relief, effective cost management, and customer growth. These factors are evident in the discussions below which compare our results of operations with prior periods.

Recent Developments

New Jersey Board of Public Utilities Approves Middlesex Base Water Rate Increase – In June 2014, Middlesex’s application with the New Jersey Board of Public Utilities (NJBPU) seeking permission to increase base water rates was partially approved, granting an increase in annual operating revenues of $4.2 million. The originally-filed base water rate increase request of $10.6 million, filed in November 2013 (subsequently revised to $8.1 million, primarily resulting from lower employee benefit plan costs), was necessitated by capital investments Middlesex had made, or committed to make, increased operations and maintenance costs and lost revenues resulting from the ending of a wholesale water sales contract with the Borough of Sayreville, New Jersey in August 2013 and Middlesex’s largest retail water customer, Hess Corporation, ceasing its oil refining operations at its Port Reading, New Jersey facility in February 2013. The new base water rates are designed to recover the increased costs, lost revenues, as well as a return on invested capital in rate base of $208.6 million based on a return on equity of 9.75%. The rate increase became effective on July 20, 2014.

Middlesex Implements Distribution System Improvement Charge – In May 2014, Middlesex filed a petition with the NJBPU seeking approval of foundational information (Foundational Filing) that would allow for the implementation of a Distribution System Improvement Charge (DSIC). A DSIC is a rate-mechanism that allows water utilities to recover investment in capital improvements to their water distribution system made between base rate proceedings.  In August 2014, the Foundational Filing was approved by the NJBPU, which allows Middlesex to implement a DSIC rate in September 2014 to recover costs for qualifying projects that are placed in service in the six-month post-approval period.  The DSIC rate is allowed to increase in three subsequent six month periods for any additional qualifying projects placed in service during those time periods. The maximum annual revenue allowed to be recovered under the approved Foundational Filing is $3.6 million.

Delaware Public Service Commission Approves Tidewater Base Water Rate Increase –The Delaware Public Service Commission (DEPSC) approved a $0.8 million increase in Tidewater’s annual base water rates, effective August 19, 2014. The originally-filed base water rate increase request of $3.9 million, filed in November 2013 (subsequently revised to $2.5 million, primarily resulting from lower employee benefit plan costs), was necessitated by capital investments Tidewater had made, or committed to make, as well as increased operations and maintenance costs. In connection with the rate increase application, Tidewater implemented a DEPSC approved 6.5% interim rate increase, subject to refund, on February 6, 2014. Since the final approved rate increase was less than the interim rate increase, Tidewater refunded $0.4 million of previously deferred revenues to customers in the form of a one-time credit to each customer account.

Dover Air Force Base – In April 2014, the DEPSC approved Tidewater’s agreement with the United States Department of Defense for the privatization of the water system of Dover Air Force Base (DAFB) in Dover, Delaware. On October 1, 2014, Tidewater began providing DAFB with potable water service. Based on the recently implemented DEPSC-approved Tidewater base water rate increase, service to DAFB is expected to generate approximately $0.6 million of revenue annually.

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Tidewater Loan – In October 2014, Tidewater closed on a $15.0 million DEPSC-approved loan. Tidewater can borrow the $15.0 million in whole or in increments at its discretion until April 30, 2015, at an interest rate based on market conditions at the time of borrowing with a maximum final maturity date of April 1, 2040. Proceeds from the loan will be used to retire short-term borrowings and also fund Tidewater’s ongoing capital program.

Outlook

Revenues for the remainder of 2014 are expected to be favorably impacted by Middlesex and Tidewater base water rate increases, (see “New Jersey Board of Public Utilities Approves Middlesex Base Water Rate Increase” and “Delaware Public Service Commission Approves Tidewater Base Water Rate Increase” above). In addition, revenues are expected to be favorably impacted by Tidewater’s agreement to provide water service to DAFB (beginning on October 1, 2014) and the full year effect of TESI’s Plantations development (Plantations) wastewater asset acquisition, which TESI began serving in October 2013.

Improved investment performance in 2013 of our retirement plan funds and a higher discount rate used for our actuarially-determined 2014 employee benefit plan expenses lowered our expenses and cash contributions in 2014.  See Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for further discussion of Employee Benefit Plans.

Revenues and earnings are influenced by weather. Changes in customer water usage patterns, number of customers and operating costs, as well as increases in capital expenditures, are the primary factors in determining the need for rate increase requests. We continue to implement plans to streamline operations and reduce operating costs in order to mitigate the level of rate increase requests.

As a result of the pace of new residential home construction, there may be an increase in the amount of preliminary survey and investigation (PS&I) costs that will not be recoverable in rates. If it is determined that recovery is unlikely, the applicable PS&I costs will be charged against income in the period of determination.

Our strategy is focused on four key areas:

· Acquire investor- and municipally-owned water and wastewater utilities;

· Operate municipal and industrial water and wastewater systems under contract;

· Invest in renewable energy projects that are complementary to the provision of water and wastewater services, and to our core water and wastewater competencies; and

· Invest in other products, services and opportunities that complement our core water and wastewater competencies.

Operating Results by Segment

The discussion of the Company’s operating results is on a consolidated basis and includes significant factors by subsidiary. The Company has two operating segments, Regulated and Non-Regulated.

The segments in the tables included below consist of the following companies: Regulated-Middlesex, Tidewater, Pinelands, Southern Shores, TESI and Twin Lakes; Non-Regulated-USA, USA-PA, and White Marsh.

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Results of Operations – Three Months Ended September 30, 2014

	(In Thousands)
	Three Months Ended September 30,
	2014						2013
	Regulated		Non- Regulated		Total		Regulated		Non- Regulated		Total
Revenues	$	29,266	$	3,403	$	32,669	$	27,905	$	3,380	$	31,285
Operations and maintenance expenses		12,261		2,695		14,956		12,451		2,669		15,120
Depreciation expense		2,835		45		2,880		2,726		46		2,772
Other taxes		3,131		82		3,213		3,043		80		3,123
Operating income		11,039		581		11,620		9,685		585		10,270
Other income, net		85		—		85		130		—		130
Interest expense		1,493		23		1,516		1,517		24		1,541
Income taxes		3,173		258		3,431		2,793		259		3,052
Net income	$	6,458	$	300	$	6,758	$	5,505	$	302	$	5,807

Operating Revenues

Operating revenues for the three months ended September 30, 2014 increased $1.4 million from the same period in 2013. This increase was primarily related to the following factors:

· Middlesex System revenues increased $0.4 million, primarily due to the following:

o Revenues from General Metered Service (GMS) customers increased by $0.6 million, primarily due to the BPU-approved rate increase implemented in July 2014; and

o Contract Sales to Municipalities decreased by $0.2 million primarily due to the loss of the Borough of Sayreville, New Jersey as a wholesale customer in August 2013 partially offset by the BPU-approved rate increase implemented in July 2014;

· Tidewater System revenues increased $0.8 million, primarily due to the following:

o The implementation of a DEPSC-approved rate increase (approximately $0.3 million); and

o Higher customer demand (approximately $0.4 million);

o Increased fees for new customer connections to our water system ($0.1 million) and

· USA’s revenues increased $0.2 million, primarily due to higher additional services revenues earned under USA’s contract to operate the Avalon water utility, sewer utility and storm water system.

Operation and Maintenance Expense

Operation and maintenance expenses for the three months ended September 30, 2014 decreased $0.2 million, primarily due to:

· Employee benefit expenses decreased $0.6 million due primarily to lower postretirement employee benefit plan costs resulting from improved performance in 2013 on our investment of retirement plan funds and a higher discount rate used for the actuarially determined 2014 expense;

· Variable production costs decreased $0.2 million primarily due to lower customer demand and higher water quality in our Middlesex System;

· Labor costs increased $0.1 million, primarily related to higher average labor rates in 2014 as compared to 2013;

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· Expenditures for billable supplemental services related to USA’s contract to operate the Avalon water utility, sewer utility and storm water system increased $0.1 million;

· Costs associated with Middlesex’s Right of Way clearing program increased $0.1 million; and

· Operation and maintenance expenses for all other categories increased $0.3 million.

Depreciation

Depreciation expense for the three months ended September 30, 2014 increased $0.1 million from the same period in 2013 due to a higher level of utility plant in service.

Other Taxes

Other taxes for the three months ended September 30, 2014 increased $0.1 million from the same period in 2013, primarily due to higher revenue related taxes on higher taxable revenues in our Middlesex system.

Other Income, net

Other Income, net for the three months ended September 30, 2014 was consistent with the same period in 2013.

Interest Charges

Interest charges for the three months ended September 30, 2014 were consistent with the same period in 2013.

Income Taxes

Income taxes for the three months ended September 30, 2014 increased $0.4 million from the same period in 2013, primarily due to increased operating income in 2014 as compared to 2013.

Net Income and Earnings Per Share

Net income for the three months ended September 30, 2014 increased $1.0 million from the same period in 2013. Basic and diluted earnings per share were $0.42 and $0.36 for the three months ended September 30, 2014 and 2013, respectively.

Results of Operations – Nine Months Ended September 30, 2014

	(In Thousands)
	Nine Months Ended September 30,
	2014							2013
	Regulated		Non- Regulated			Total		Regulated		Non- Regulated		Total
Revenues	$	78,547	$	10,485		$	89,032	$	76,906	$	10,518	$	87,424
Operations and maintenance expenses		36,624		8,333			44,957		37,184		8,514		45,698
Depreciation expense		8,394		138			8,532		8,070		135		8,205
Other taxes		8,944		266			9,210		8,953		262		9,215
Operating income		24,585		1,748			26,333		22,699		1,607		24,306
Other income, net		196		(6	)		190		333		—		333
Interest expense		4,066		68			4,134		4,162		72		4,234
Income taxes		6,962		773			7,735		6,222		718		6,940
Net income	$	13,753	$	901		$	14,654	$	12,648	$	817	$	13,465

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Operating Revenues

Operating revenues for the nine months ended September 30, 2014 increased $1.6 million from the same period in 2013. This increase was primarily related to the following factors:

· Middlesex System revenues decreased $0.8 million, primarily due to the following:

o Revenues from GMS customers were consistent with the same period in 2013, primarily due to decreased GMS customer demand (approximately $0.8 million) as a result of unfavorable weather and Hess Corporation ceasing its oil refining operations at its Port Reading, New Jersey facility in February 2013. This was offset by the BPU-approved rate increase implemented in July 2014 (approximately $0.8 million); and

o Contract Sales to Municipalities decreased by $0.8 million primarily due to the loss of the Borough of Sayreville, New Jersey as a wholesale customer in August 2013 ($1.2 million) partially offset by the BPU-approved rate increase implemented in July 2014 and by higher demand from customers (collectively $0.4 million);

· Tidewater System revenues increased $1.9 million, primarily due to the following:

o Increased fees for new customer connections to our water system;

o The February 2014 implementation of a DEPSC-approved 6.5% interim base rate increase, net of the partial deferral of the interim base rate increase (see Note 2, Rate and Regulatory Matters – Tidewater); and

o Higher customer demand;

· TESI’s revenues increased $0.4 million, primarily due to service revenues from the customers of the acquired Plantations wastewater system, which TESI began serving in October 2013; and

· USA-PA’s revenues increased $0.1 million, primarily from scheduled increases in the fixed fees paid under contract with the City of Perth Amboy.

Operation and Maintenance Expense

Operation and maintenance expenses for the nine months ended September 30, 2014 decreased $0.7 million, primarily related to the following factors:

· Employee benefit expenses decreased $2.1 million due primarily to lower postretirement employee benefit plan costs resulting from improved performance in 2013 on our investment of retirement plan funds and a higher discount rate used for the actuarially determined 2014 expense;

· Variable production costs decreased $0.3 million primarily due to lower customer demand and higher water quality in our Middlesex System;

· Expenditures for billable supplemental services related to USA’s Avalon contract decreased $0.3 million;

· Severe winter weather resulted in higher water main break costs of $0.5 million in our Middlesex and Pinelands Systems;

· Inspection, maintenance and repair services increased $0.4 million at Middlesex’s production and transmission and distribution facilities;

· Labor costs increased $0.7 million, primarily related to higher overtime resulting from severe winter weather in our Middlesex System; and

· Operation and maintenance expenses for all other categories increased $0.4 million.

Depreciation

Depreciation expense for the nine months ended September 30, 2014 increased $0.3 million from the same period in 2013 due to a higher level of utility plant in service.

19

Other Taxes

Other taxes for the nine months ended September 30, 2014 were consistent with the same period in 2013, primarily due to lower revenue related taxes on lower taxable revenues in our Middlesex system offset by higher payroll taxes.

Other Income, net

Other Income, net for the nine months ended September 30, 2014 decreased $0.1 million from the same period in 2013, primarily due to business development costs at our TESI subsidiary.

Interest Charges

Interest charges for the nine months ended September 30, 2014 decreased $0.1 million from the same period in 2013, primarily due to lower average interest rates on long-term debt and lower average long-term debt outstanding.

Income Taxes

Income taxes for the nine months ended September 30, 2014 increased $0.8 million from the same period in 2013, primarily due to increased operating income in 2014 as compared to 2013 and a higher effective tax rate, resulting from Middlesex’s subsidiaries who pay state income taxes contributing a higher percentage of 2014 consolidated pre-tax income.

Net Income and Earnings Per Share

Net income for the nine months ended September 30, 2014 increased $1.2 million from the same period in 2013. Basic earnings per share were $0.91 and $0.84 for the nine months ended September 30, 2014 and 2013, respectively. Diluted earnings per share were $0.90 and $0.83 for the nine months ended September 30, 2014 and 2013, respectively.

Liquidity and Capital Resources

Operating Cash Flows

Cash flows from operations are largely based on four factors: weather, adequate and timely rate increases, effective cost management and customer growth. The effect of those factors on net income is discussed in “Results of Operations.”

For the nine months ended September 30, 2014, cash flows from operating activities increased $1.3 million to $22.4 million. The increase in cash flows from operating activities primarily resulted from the timing of income tax and vendor payments. The $22.4 million of net cash flow from operations enabled us to fund all of our utility plant expenditures internally for the period.

Capital Expenditures and Commitments

To fund our capital program, we use internally generated funds, short-term and long-term debt borrowings, proceeds from sales of common stock under our Amended and Restated Dividend Reinvestment and Common Stock Purchase Plan (DRP) and common stock offerings. See below for a more detailed discussion regarding the funding of our capital program.

The capital investment program for 2014 is currently estimated to be $26.6 million.  Through September 30, 2014, we have expended $15.8 million and expect to incur approximately $10.8 million for capital projects for the remainder of 2014.

We currently project that we may expend approximately $59.0 million for capital projects in 2015 and 2016. The actual amount and timing of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain capital projects.

20

To fund our capital program for the remainder of 2014, we plan on utilizing:

· Internally generated funds

· Proceeds from the sale of common stock through the DRP

· Funds available and held in trust under existing New Jersey State Revolving Fund (SRF) loans (currently, $2.3 million). SRF programs provide low cost financing for projects that meet certain water quality and system improvement benchmarks.

· Short-term borrowings, if necessary, through $60.0 million of available lines of credit with several financial institutions. As of September 30, 2014, the outstanding borrowings under these credit lines were $30.5 million.

Recent Accounting Pronouncements – See Note 1 of the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements.

21

Item 3. Quantitative and Qualitative Disclosures of Market Risk

We are exposed to market risk associated with changes in interest rates and commodity prices. The Company is subject to the risk of fluctuating interest rates in the normal course of business. Our policy is to manage interest rates through the use of fixed rate long-term debt and, to a lesser extent, short-term debt. The Company’s interest rate risk related to existing fixed rate, long-term debt is not material due to the term of the majority of our First Mortgage Bonds, which have final maturity dates ranging from 2018 to 2047. Over the next twelve months, approximately $5.6 million of the current portion of 40 existing long-term debt instruments will mature. Applying a hypothetical change in the rate of interest charged by 10% on those borrowings, would not have a material effect on our earnings.

Our risks associated with commodity price increases for chemicals, electricity and other commodities are reduced through contractual arrangements and the ability to recover price increases through rates. Non-performance by these commodity suppliers could have a material adverse impact on our results of operations, financial position and cash flows.

We are exposed to credit risk for both our Regulated and Non-Regulated business segments. Our Regulated operations serve residential, commercial, industrial and municipal customers while our Non-Regulated operations engage in business activities with developers, government entities and other customers. Our primary credit risk is exposure to customer default on contractual obligations and the associated loss that may be incurred due to the non-payment of customer accounts receivable balances. Our credit risk is managed through established credit and collection policies which are in compliance with applicable regulatory requirements and involve monitoring of customer exposure and the use of credit risk mitigation measures such as letters of credit or prepayment arrangements. Our credit portfolio is diversified with no significant customer or industry concentrations. In addition, our Regulated businesses are generally able to recover all prudently incurred costs including uncollectible customer accounts receivable expenses and collection costs through rates.

The Company's postretirement benefit plan assets are exposed to fluctuating market prices of debt and equity securities. Changes to the Company's postretirement benefit plan assets’ value can impact the Company's postretirement benefit plan expense, funded status and future minimum funding requirements. Our risk is reduced through our ability to recover postretirement benefit plan costs through rates.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities and Exchange Act of 1934 (the Exchange Act), an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures was conducted by the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer. Based upon that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this Report. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding disclosure.

22

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

The information about risk factors does not differ materially from those set forth in Part I, Item 1A. of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

23

Item 6. Exhibits

31.1 Section 302 Certification by Dennis W. Doll pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.

31.2 Section 302 Certification by A. Bruce O’Connor pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.

32.1 Section 906 Certification by Dennis W. Doll pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.2 Section 906 Certification by A. Bruce O’Connor pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document

101.SCH XBRL Schema Document

101.CAL XBRL Calculation Linkbase Document

101.LAB XBRL Labels Linkbase Document

101.PRE XBRL Presentation Linkbase Document

101.DEF XBRL Definition Linkbase Document

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MIDDLESEX WATER COMPANY
By:	/s/A. Bruce O’Connor
	A. Bruce O’Connor
	Vice President, Treasurer and
	Chief Financial Officer
	(Principal Accounting Officer)

Date: November 6, 2014

25

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION PURSUANT TO RULES 13a-14

AND 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934

I, Dennis W. Doll, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Middlesex 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 changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth 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.

/s/ Dennis W. Doll     

Dennis W. Doll

Chief Executive Officer

Date: November 6, 2014

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION PURSUANT TO RULES 13a-14

AND 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934

I, A. Bruce O’Connor, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Middlesex 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 changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth 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.

/s/ A. Bruce O’Connor      

A. Bruce O’Connor

Chief Financial Officer

Date: November 6, 2014

EX-32.1

Exhibit 32.1

SECTION 906 CERTIFICATION PURSUANT TO 18 U.S.C. §1350

I, Dennis W. Doll, hereby certify that, to the best of my knowledge, the periodic report being filed herewith containing financial statements fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)) and that information contained in said periodic report fairly presents, in all material respects, the financial condition and results of operations of Middlesex Water Company for the period covered by said periodic report.

/s/ Dennis W. Doll      

Dennis W. Doll

Chief Executive Officer

Date: November 6, 2014

A signed original of this written statement required by Section 906 has been provided to Middlesex Water Company and will be retained by Middlesex Water Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

SECTION 906 CERTIFICATION PURSUANT TO 18 U.S.C. §1350

I, A. Bruce O’Connor, hereby certify that, to the best of my knowledge, the periodic report being filed herewith containing financial statements fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)) and that information contained in said periodic report fairly presents, in all material respects, the financial condition and results of operations of Middlesex Water Company for the period covered by said periodic report.

/s/ A. Bruce O’Connor      

A. Bruce O’Connor

Chief Financial Officer

Date: November 6, 2014

A signed original of this written statement required by Section 906 has been provided to Middlesex Water Company and will be retained by Middlesex Water Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Basic:
Net Income	$ 6,758	$ 5,807	$ 14,654	$ 13,465
Preferred Dividend	(36)	(44)	(115)	(147)
Earnings Applicable to Common Stock	6,722	5,763	14,539	13,318
Basic EPS (in dollars per share)	$ 0.42	$ 0.36	$ 0.91	$ 0.84
Weighted-average number of basic shares outstanding (in shares)	16,097	15,882	16,030	15,839
Diluted:
Adjusted Earnings Applicable to Common Stock	6,745	5,793	14,614	13,425
Diluted EPS (in dollars per share)	$ 0.42	$ 0.36	$ 0.90	$ 0.83
Weighted-average diluted shares outstanding (in shares)	16,253	16,117	16,211	16,093
Convertible Preferred Stock $7.00 Series [Member]
Diluted:
Preferred Dividend	17	24	57	73
Common Shares Attributable to Dilutive Effect of Conversion of Preferred Stock (in shares)	115	167	140	167
Convertible Preferred Stock $8.00 Series [Member]
Diluted:
Preferred Dividend	$ 6	$ 6	$ 18	$ 34
Common Shares Attributable to Dilutive Effect of Conversion of Preferred Stock (in shares)	41	68	41	87

XML

Rate and Regulatory Matters

9 Months Ended

Sep. 30, 2014

Rate and Regulatory Matters [Abstract]

Rate and Regulatory Matters

Note 2 – Rate and Regulatory Matters

Middlesex – In June 2014, Middlesex's application with the New Jersey Board of Public Utilities (NJBPU) seeking permission to increase base water rates was partially approved, granting an increase in annual operating revenues of $4.2 million. The originally-filed base water rate increase request of $10.6 million, filed in November 2013 (subsequently revised to $8.1 million, primarily resulting from lower employee benefit plan costs), was necessitated by capital investments Middlesex had made, or committed to make, increased operations and maintenance costs and lost revenues resulting from the ending of a wholesale water sales contract with the Borough of Sayreville, New Jersey in August 2013 and Middlesex's largest retail water customer, Hess Corporation, ceasing its oil refining operations at its Port Reading, New Jersey facility in February 2013. The new base water rates are designed to recover the increased costs, lost revenues, as well as a return on invested capital in rate base of $208.6 million based on a return on equity of 9.75%. The rate increase became effective on July 20, 2014.

In May 2014, Middlesex filed a petition with the NJBPU seeking approval of foundational information (Foundational Filing) that would allow for the implementation of a Distribution System Improvement Charge (DSIC). A DSIC is a rate-mechanism that allows water utilities to recover investment in capital improvements to their water distribution system made between base rate proceedings.  In August 2014, the Foundational Filing was approved by the NJBPU, which allows Middlesex to implement a DSIC rate in September 2014 to recover costs for qualifying projects that are placed in service in the six-month post-approval period.  The DSIC rate is allowed to increase in three subsequent six month periods for any additional qualifying projects placed in service during those time periods. The maximum annual revenue allowed to be recovered under the approved Foundational Filing is $3.6 million. 

Tidewater - The Delaware Public Service Commission (DEPSC) approved a $0.8 million increase in Tidewater's annual base water rates, effective August 19, 2014. The originally-filed base water rate increase request of $3.9 million, filed in November 2013 (subsequently revised to $2.5 million, primarily resulting from lower employee benefit plan costs), was necessitated by capital investments Tidewater had made, or committed to make, as well as increased operations and maintenance costs. In connection with the rate increase application, Tidewater implemented a DEPSC approved 6.5% interim rate increase, subject to refund, on February 6, 2014. Since the final approved rate increase was less than the interim rate increase, Tidewater refunded $0.4 million of previously deferred revenues to customers in the form of a one-time credit to each customer account.

In April 2014, the DEPSC approved Tidewater's agreement with the United States Department of Defense for the privatization of the water system of Dover Air Force Base (DAFB) in Dover, Delaware. On October 1, 2014, Tidewater began providing DAFB with potable water service. Based on the recently implemented DEPSC-approved Tidewater base water rate increase, service to DAFB is expected to generate approximately $0.6 million of revenue annually. 

TESI - The DEPSC approved an April 2014 request by TESI to relinquish its Certificate of Public Necessity and Convenience (“CPCN”) for a real estate parcel in Sussex County, Delaware. This approval allowed for a companion transaction to be completed, whereby TESI was reimbursed with a combination of cash and a future receivable by a real estate developer for $1.9 million of Preliminary Survey and Investigation Costs incurred in connection with the CPCN. TESI recognized a gain of less than $0.1 million from this transaction.
 

XML

Commitments and Contingent Liabilities (Narrative) (Details) (USD $)
In Millions, unless otherwise specified

9 Months Ended

Sep. 30, 2014

Dec. 31, 2013

Period of wastewater agreement

20 years

Water and wastewater system agreement

USA-PA operates the City of Perth Amboy, New Jersey's water and wastewater systems under a 20-year agreement, which expires in 2018. In connection with the agreement with Perth Amboy, USA-PA entered into a 20-year subcontract with a wastewater operating company for the operation and maintenance of the Perth Amboy wastewater collection system.

Budgeted construction cost for construction program, 2014

$ 26.6

Guarant liabilty for AWM's performance

$ 0.3

$ 0.4

NJ Water Supply Authority [Member]

Commitment to purchase water

Middlesex has an agreement with the New Jersey Water Supply Authority (NJWSA) for the purchase of untreated water through November 30, 2023

Purchase commitment expiration date of contract

Nov. 30, 2023

Water purchase per commitment

27

Regulated Water Authority [Member]

Commitment to purchase water

Middlesex also has an agreement with a non-affiliated regulated water utility for the purchase of treated water.

Purchase commitment expiration date of contract

Feb. 27, 2016

Water purchase per commitment

3

XML

Short-term Borrowings (Schedule of Short Term Borrowings) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Lines Of Credit Facility
Weighted daily outstanding amount	$ 28,832	$ 28,608	$ 27,906	$ 27,472
Weighted average interest rates	1.44%	1.32%	1.44%	1.35%

XML

Commitments and Contingent Liabilities (Schedule of Purchased Water Costs) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Purchased Water
Treated	$ 764	$ 780	$ 2,344	$ 2,303
Untreated	642	618	1,763	1,739
Total Costs	$ 1,406	$ 1,398	$ 4,107	$ 4,042

XML

Employee Benefit Plans (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Annual benefits paid to retired participants			$ 0.3
Pension Benefit Plan [Member]
Benfit plan, cash contributions	1.3	1.9	2.5	2.6
Expected cash contributions			0.8
Other Benefits Plan [Member]
Benfit plan, cash contributions	0.5	1.0	0.9	1.7
Expected cash contributions			$ 0.3

XML

Basis of Presentation and Recent Developments

9 Months Ended

Sep. 30, 2014

Basis of Presentation and Recent Developments [Abstract]

Basis of Presentation and Recent Developments

Note 1 – Basis of Presentation and Recent Developments

Middlesex Water Company (Middlesex or the Company) is the parent company and sole shareholder of Tidewater Utilities, Inc. (Tidewater), Tidewater Environmental Services, Inc. (TESI), Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), Utility Service Affiliates, Inc. (USA), Utility Service Affiliates  (Perth Amboy) Inc. (USA-PA), and Twin Lakes Utilities, Inc. (Twin Lakes). Southern Shores Water Company, LLC (Southern Shores) and White Marsh Environmental Systems, Inc. (White Marsh) are wholly-owned subsidiaries of Tidewater. The financial statements for Middlesex and its wholly-owned subsidiaries (the Company) are reported on a consolidated basis. All significant intercompany accounts and transactions have been eliminated.

The consolidated notes within the 2013 Annual Report on Form 10-K (the 2013 Form 10-K) are applicable to these financial statements and, in the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (including normal recurring accruals) to present fairly the financial position as of September 30, 2014, the results of operations for the three month and nine month periods ended September 30, 2014, and 2013 and cash flows for the nine month periods ended September 30, 2014, and 2013. Information included in the Condensed Consolidated Balance Sheet as of December 31, 2013, has been derived from the Company's audited financial statements for the year ended December 31, 2013 included in the 2013 Form 10-K. These condensed financial statements should be read in conjunction with the financial statements and notes included in the Company's 2013 Form 10-K.

Recent Accounting Guidance

In May 2014, the Financial Accounting Standards Board issued an update to authoritative guidance related to revenue from contracts with customers. The update replaces most of the existing guidance with a single set of principles for recognizing revenue from contracts with customers. The guidance will be effective for the Company beginning January 1, 2017. Early adoption is not permitted. The new guidance must be applied retrospectively to each prior period presented or retrospectively via a cumulative effect upon the date of initial application. We are currently evaluating the impact that the adoption will have on our consolidated financial statements and related disclosures.

There is no additional new adopted or proposed accounting guidance that could have a material impact on the Company's financial statements.

XML

Employee Benefit Plans (Schedule of Benefits Plans) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Pension Benefit Plan [Member]
Periodic costs for employee retirement benefit plans
Service Cost	$ 473	$ 575	$ 1,420	$ 1,725
Interest Cost	670	617	2,011	1,851
Expected Return on Assets	(883)	(724)	(2,650)	(2,171)
Amortization of Unrecognized Losses	104	408	312	1,224
Amortization of Unrecognized Prior Service Cost (Credit)	1	2	2	7
Net Periodic Benefit Cost	365	878	1,095	2,636
Other Benefits Plan [Member]
Periodic costs for employee retirement benefit plans
Service Cost	258	334	774	1,003
Interest Cost	448	399	1,344	1,196
Expected Return on Assets	(484)	(406)	(1,453)	(1,217)
Amortization of Unrecognized Losses	353	516	1,060	1,549
Amortization of Unrecognized Prior Service Cost (Credit)	(432)	(432)	(1,296)	(1,296)
Net Periodic Benefit Cost	$ 143	$ 411	$ 429	$ 1,235

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) [Abstract]
Operating Revenues	$ 32,669	$ 31,285	$ 89,032	$ 87,424
Operating Expenses:
Operations and Maintenance	14,956	15,120	44,957	45,698
Depreciation	2,880	2,772	8,532	8,205
Other Taxes	3,213	3,123	9,210	9,215
Total Operating Expenses	21,049	21,015	62,699	63,118
Operating Income	11,620	10,270	26,333	24,306
Other Income (Expense):
Allowance for Funds Used During Construction	80	104	213	230
Other Income	49	27	195	124
Other Expenses	(44)	(1)	(218)	(21)
Total Other Income, net	85	130	190	333
Interest Charges	1,516	1,541	4,134	4,234
Income before Income Taxes	10,189	8,859	22,389	20,405
Income Taxes	3,431	3,052	7,735	6,940
Net Income	6,758	5,807	14,654	13,465
Preferred Stock Dividend Requirements	36	44	115	147
Earnings Applicable to Common Stock	$ 6,722	$ 5,763	$ 14,539	$ 13,318
Earnings per share of Common Stock:
Basic (in dollars per share)	$ 0.42	$ 0.36	$ 0.91	$ 0.84
Diluted (in dollars per share)	$ 0.42	$ 0.36	$ 0.90	$ 0.83
Average Number of Common Shares Outstanding :
Basic (in shares)	16,097	15,882	16,030	15,839
Diluted (in shares)	16,253	16,117	16,211	16,093
Cash Dividends Paid per Common Share (in dollars per share)	$ 0.1900	$ 0.1875	$ 0.5700	$ 0.5625

XML

CONDENSED CONSOLIDATED STATEMENTS OF CAPITAL STOCK AND LONG-TERM DEBT (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Common Stock, No Par Value	$ 148,186	$ 146,185
Retained Earnings	47,977	42,560
TOTAL COMMON EQUITY	196,163	188,745
TOTAL PREFERRED STOCK	2,436	2,886
SUBTOTAL LONG-TERM DEBT	132,832	133,112
Add: Premium on Issuance of Long-term Debt	1,972	2,072
Less: Current Portion of Long-term Debt	(5,634)	(5,386)
TOTAL LONG-TERM DEBT	129,170	129,798
Amortizing Secured Note, due December 20, 2021 [Member]
SUBTOTAL LONG-TERM DEBT	1,872	2,005
Amortizing Secured Note, due May 19, 2028 [Member]
SUBTOTAL LONG-TERM DEBT	5,740	6,055
Amortizing Secured Note, due August 25, 2030 [Member]
SUBTOTAL LONG-TERM DEBT	4,457	4,667
Amortizing Secured Note, due September 19, 2031 [Member]
SUBTOTAL LONG-TERM DEBT	4,737	4,947
State Revolving Trust Note, due December 31, 2022 [Member]
SUBTOTAL LONG-TERM DEBT	443	465
State Revolving Trust Note, due May 1, 2025 [Member]
SUBTOTAL LONG-TERM DEBT	2,559	2,654
State Revolving Trust Note, due March 1, 2026 [Member]
SUBTOTAL LONG-TERM DEBT	506	541
State Revolving Trust Note, due January 25, 2027 [Member]
SUBTOTAL LONG-TERM DEBT	536	569
State Revolving Trust Note, due December 1, 2026 [Member]
SUBTOTAL LONG-TERM DEBT	720	742
State Revolving Trust Bond, due August 1, 2021 [Member]
SUBTOTAL LONG-TERM DEBT	299	343
0% State Revolving Trust Bond, due August 1, 2021 [Member]
SUBTOTAL LONG-TERM DEBT	241	281
State Revolving Trust Note, due July 1, 2028 [Member]
SUBTOTAL LONG-TERM DEBT	322	330
State Revolving Trust Note, due January 1, 2028 [Member]
SUBTOTAL LONG-TERM DEBT	107	110
State Revolving Trust Note, due August 1, 2031 [Member]
SUBTOTAL LONG-TERM DEBT	1,115	467
Amortizing Secured Note, due April 20, 2029 [Member]
SUBTOTAL LONG-TERM DEBT	5,087	5,348
Amortizing Secured Note, due January 20, 2030 [Member]
SUBTOTAL LONG-TERM DEBT	3,833	4,021
Amortizing Secured Note, due January 20, 2030 [Member]
SUBTOTAL LONG-TERM DEBT	7,863	8,248
State Revolving Trust Note, due July 1, 2031 [Member]
SUBTOTAL LONG-TERM DEBT	2,463	2,515
State Revolving Trust Note, due November 30, 2030 [Member]
SUBTOTAL LONG-TERM DEBT	1,304	1,333
First Mortgage Bonds - Series X [Member]
SUBTOTAL LONG-TERM DEBT	215	268
First Mortgage Bonds - Series Y [Member]
SUBTOTAL LONG-TERM DEBT	245	300
First Mortgage Bonds - Series Z [Member]
SUBTOTAL LONG-TERM DEBT	559	671
First Mortgage Bonds - Series AA [Member]
SUBTOTAL LONG-TERM DEBT	700	830
First Mortgage Bonds - Series BB [Member]
SUBTOTAL LONG-TERM DEBT	845	965
First Mortgage Bonds - Series CC [Member]
SUBTOTAL LONG-TERM DEBT	1,025	1,145
First Mortgage Bonds - Series EE [Member]
SUBTOTAL LONG-TERM DEBT	3,550	3,968
First Mortgage Bonds - Series FF [Member]
SUBTOTAL LONG-TERM DEBT	4,900	5,335
First Mortgage Bonds - Series GG [Member]
SUBTOTAL LONG-TERM DEBT	1,083	1,171
First Mortgage Bonds - Series HH [Member]
SUBTOTAL LONG-TERM DEBT	1,390	1,475
First Mortgage Bonds - Series II [Member]
SUBTOTAL LONG-TERM DEBT	881	971
First Mortgage Bonds - Series JJ [Member]
SUBTOTAL LONG-TERM DEBT	1,090	1,165
First Mortgage Bonds - Series KK [Member]
SUBTOTAL LONG-TERM DEBT	1,255	1,346
First Mortgage Bonds - Series LL [Member]
SUBTOTAL LONG-TERM DEBT	1,435	1,505
First Mortgage Bonds - Series MM [Member]
SUBTOTAL LONG-TERM DEBT	1,537	1,637
First Mortgage Bonds - Series NN [Member]
SUBTOTAL LONG-TERM DEBT	1,755	1,835
First Mortgage Bonds - Series OO [Member]
SUBTOTAL LONG-TERM DEBT	2,559	2,709
First Mortgage Bonds - Series PP [Member]
SUBTOTAL LONG-TERM DEBT	850	885
First Mortgage Bonds - Series QQ [Member]
SUBTOTAL LONG-TERM DEBT	9,915	9,915
First Mortgage Bonds - Series RR [Member]
SUBTOTAL LONG-TERM DEBT	22,500	22,500
First Mortgage Bonds - Series SS [Member]
SUBTOTAL LONG-TERM DEBT	23,000	23,000
First Mortgage Bonds - Series TT [Member]
SUBTOTAL LONG-TERM DEBT	2,709	2,860
First Mortgage Bonds - Series UU [Member]
SUBTOTAL LONG-TERM DEBT	975	1,015
First Mortgage Bonds - Series VV [Member]
SUBTOTAL LONG-TERM DEBT	2,720
First Mortgage Bonds - Series WW [Member]
SUBTOTAL LONG-TERM DEBT	935
Convertible Preferred Stock $7.00 Series [Member]
TOTAL PREFERRED STOCK	1,007	1,457
Convertible Preferred Stock $8.00 Series [Member]
TOTAL PREFERRED STOCK	349	349
Nonredeemable Preferred Stock $7.00 Series [Member]
TOTAL PREFERRED STOCK	80	80
Nonredeemable Preferred Stock $4.75 Series [Member]
TOTAL PREFERRED STOCK	$ 1,000	$ 1,000

XML

Rate and Regulatory Matters (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	1 Months Ended		0 Months Ended			1 Months Ended	9 Months Ended	1 Months Ended
	Nov. 08, 2013 New Jersey Board of Public Utilities [Member]	Jun. 30, 2014 New Jersey Board of Public Utilities [Member]	May 31, 2014 New Jersey Board of Public Utilities [Member]	Aug. 19, 2014 Delware Public Service Commission [Member] Tidewater [Member]	Jul. 02, 2014 Delware Public Service Commission [Member] Tidewater [Member]	Nov. 25, 2013 Delware Public Service Commission [Member] Tidewater [Member]	Apr. 30, 2014 Delware Public Service Commission [Member] Tidewater [Member]	Sep. 30, 2014 Delware Public Service Commission [Member] Tidewater [Member]	Apr. 30, 2014 Delware Public Service Commission [Member] TESI [Member]
Regulatory Liabilities [Line Items]
Approved increase in annual operating revenues		$ 4.2
Originally filed increase in annual operating revenue	10.6		3.6			3.9
Approved increase in annual operating revenue (percentage)					6.50%
Amended filed increase in annual operating revenue	8.1			0.8	2.5
Return on equity		9.75%
Base rate amount		208.6
Refund of previously deferred revenues								0.4
Projected annual revenue							0.6
Reimbursements received for preliminary survey and investigation costs									1.9
Gain on relinguishment of CPNC									$ 0.1

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Capitalization (Schedule of Carrying Amount and Fair Value of Bonds) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Carrying amount [Member]
First Mortgage Bonds	$ 88,628	$ 87,471
SRF Bonds	540	625
Fair value [Member]
First Mortgage Bonds	88,532	79,733
SRF Bonds	$ 542	$ 628

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CONDENSED CONSOLIDATED STATEMENTS OF CAPITAL STOCK AND LONG-TERM DEBT (Unaudited) (Parenthetical) In Thousands, unless otherwise specified			9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Amortizing Secured Note, due December 20, 2021 [Member]	Sep. 30, 2014 Amortizing Secured Note, due May 19, 2028 [Member]	Sep. 30, 2014 Amortizing Secured Note, due August 25, 2030 [Member]	Sep. 30, 2014 Amortizing Secured Note, due September 19, 2031 [Member]	Sep. 30, 2014 State Revolving Trust Note, due December 31, 2022 [Member]	Sep. 30, 2014 State Revolving Trust Note, due May 1, 2025 [Member]	Sep. 30, 2014 State Revolving Trust Note, due March 1, 2026 [Member]	Sep. 30, 2014 State Revolving Trust Note, due January 25, 2027 [Member]	Sep. 30, 2014 State Revolving Trust Note, due December 1, 2026 [Member]	Sep. 30, 2014 State Revolving Trust Bond, due August 1, 2021 [Member]	Sep. 30, 2014 0% State Revolving Trust Bond, due August 1, 2021 [Member]	Sep. 30, 2014 State Revolving Trust Note, due July 1, 2028 [Member]	Sep. 30, 2014 State Revolving Trust Note, due January 1, 2028 [Member]	Sep. 30, 2014 State Revolving Trust Note, due August 1, 2031 [Member]	Sep. 30, 2014 Amortizing Secured Note, due April 20, 2029 [Member]	Sep. 30, 2014 Amortizing Secured Note, due January 20, 2030 [Member]	Sep. 30, 2014 Amortizing Secured Note, due January 20, 2030 [Member]	Sep. 30, 2014 State Revolving Trust Note, due July 1, 2031 [Member]	Sep. 30, 2014 State Revolving Trust Note, due November 30, 2030 [Member]	Sep. 30, 2014 First Mortgage Bonds - Series X [Member]	Sep. 30, 2014 First Mortgage Bonds - Series Y [Member]	Sep. 30, 2014 First Mortgage Bonds - Series Z [Member]	Sep. 30, 2014 First Mortgage Bonds - Series AA [Member]	Sep. 30, 2014 First Mortgage Bonds - Series BB [Member]	Sep. 30, 2014 First Mortgage Bonds - Series CC [Member]	Sep. 30, 2014 First Mortgage Bonds - Series EE [Member]	Sep. 30, 2014 First Mortgage Bonds - Series FF [Member]	Sep. 30, 2014 First Mortgage Bonds - Series GG [Member]	Sep. 30, 2014 First Mortgage Bonds - Series HH [Member]	Sep. 30, 2014 First Mortgage Bonds - Series II [Member]	Sep. 30, 2014 First Mortgage Bonds - Series JJ [Member]	Sep. 30, 2014 First Mortgage Bonds - Series NN [Member]	Sep. 30, 2014 First Mortgage Bonds - Series LL [Member]	Sep. 30, 2014 First Mortgage Bonds - Series KK [Member]	Sep. 30, 2014 First Mortgage Bonds - Series MM [Member]	Sep. 30, 2014 First Mortgage Bonds - Series OO [Member]	Sep. 30, 2014 First Mortgage Bonds - Series PP [Member]	Sep. 30, 2014 First Mortgage Bonds - Series QQ [Member]	Sep. 30, 2014 First Mortgage Bonds - Series RR [Member]	Sep. 30, 2014 First Mortgage Bonds - Series SS [Member]	Sep. 30, 2014 First Mortgage Bonds - Series TT [Member]	Sep. 30, 2014 First Mortgage Bonds - Series UU [Member]	Sep. 30, 2014 Convertible Preferred Stock $7.00 Series [Member]	Dec. 31, 2013 Convertible Preferred Stock $7.00 Series [Member]	Sep. 30, 2014 Convertible Preferred Stock $8.00 Series [Member]	Dec. 31, 2013 Convertible Preferred Stock $8.00 Series [Member]	Sep. 30, 2014 Nonredeemable Preferred Stock $7.00 Series [Member]	Dec. 31, 2013 Nonredeemable Preferred Stock $7.00 Series [Member]	Sep. 30, 2014 Nonredeemable Preferred Stock $4.75 Series [Member]	Dec. 31, 2013 Nonredeemable Preferred Stock $4.75 Series [Member]
Common Stock, Shares Authorized	40,000	40,000
Common Stock, Shares Outstanding	16,107	15,963
Preferred Stock, Shares Authorized	130	130
Preferred Stock, Shares Outstanding	24	28																																											10	14	3	3	1	1	10	10
Due date of debt			Dec. 20, 2021	May 19, 2028	Aug. 25, 2030	Sep. 19, 2031	Dec. 31, 2022	May 01, 2025	Mar. 01, 2026	Jan. 25, 2027	Dec. 01, 2026	Aug. 01, 2021	Aug. 01, 2021	Jul. 01, 2028	Jan. 01, 2028	Aug. 01, 2031	Apr. 20, 2029	Jan. 20, 2030	Jan. 20, 2030	Jul. 01, 2031	Nov. 30, 2030	Sep. 01, 2018	Sep. 01, 2018	Sep. 01, 2019	Sep. 01, 2019	Sep. 01, 2021	Sep. 01, 2021	Aug. 01, 2023	Aug. 01, 2024	Aug. 01, 2026	Aug. 01, 2026	Aug. 01, 2024	Aug. 01, 2027	Aug. 01, 2030	Aug. 01, 2028	Aug. 01, 2028	Aug. 01, 2030	Aug. 01, 2031	Aug. 01, 2031	Oct. 01, 2023	Oct. 01, 2038	Oct. 01, 2047	Aug. 01, 2032	Aug. 01, 2032
Interest rate			8.05%	6.25%	6.44%	6.46%	4.22%	3.60%	3.30%	3.49%	4.03%		0.00%	3.64%	3.64%	3.45%	6.59%	7.05%	5.69%	3.75%	3.75%	0.00%		0.00%		0.00%		0.00%		0.00%		0.00%				0.00%	0.00%	0.00%		5.00%	3.80%	4.25%	0.00%
Interest rate - minimum												4.00%											4.25%		5.25%		4.00%		3.00%		4.00%		3.40%	3.00%	5.00%				2.00%					3.00%
Interest rate - maximum												5.00%											4.63%		5.75%		5.00%		5.50%		5.00%		5.00%	4.375%	5.50%				5.00%					3.25%

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
UTILITY PLANT:
Water Production	$ 136,170	$ 132,834
Transmission and Distribution	366,966	359,931
General	57,744	55,670
Construction Work in Progress	11,142	8,410
TOTAL	572,022	556,845
Less Accumulated Depreciation	115,492	110,366
UTILITY PLANT - NET	456,530	446,479
CURRENT ASSETS:
Cash and Cash Equivalents	5,052	4,834
Accounts Receivable, net	11,153	11,640
Unbilled Revenues	7,427	5,652
Materials and Supplies (at average cost)	2,138	1,984
Prepayments	2,981	1,728
TOTAL CURRENT ASSETS	28,751	25,838
DEFERRED CHARGES AND OTHER ASSETS:
Unamortized Debt Expense	3,451	3,526
Preliminary Survey and Investigation Charges	2,781	4,728
Regulatory Assets	34,023	34,386
Operations Contracts, Developer and Other Receivables	3,587	2,744
Restricted Cash	3,438	2,473
Non-utility Assets - Net	9,254	9,440
Other	683	727
TOTAL DEFERRED CHARGES AND OTHER ASSETS	57,217	58,024
TOTAL ASSETS	542,498	530,341
CAPITALIZATION:
Common Stock, No Par Value	148,186	146,185
Retained Earnings	47,977	42,560
TOTAL COMMON EQUITY	196,163	188,745
Preferred Stock	2,436	2,886
Long-term Debt	129,170	129,798
TOTAL CAPITALIZATION	327,769	321,429
CURRENT LIABILITIES:
Current Portion of Long-term Debt	5,634	5,386
Notes Payable	30,500	28,450
Accounts Payable	7,193	6,328
Accrued Taxes	10,563	8,132
Accrued Interest	431	1,151
Unearned Revenues and Advanced Service Fees	852	837
Other	1,518	2,394
TOTAL CURRENT LIABILITIES	56,691	52,678
COMMITMENTS AND CONTINGENT LIABILITIES (Note 7)
DEFERRED CREDITS AND OTHER LIABILITIES:
Customer Advances for Construction	21,336	21,837
Accumulated Deferred Investment Tax Credits	930	989
Accumulated Deferred Income Taxes	41,254	39,110
Employee Benefit Plans	18,708	21,335
Regulatory Liability - Cost of Utility Plant Removal	10,044	9,639
Other	1,322	1,348
TOTAL DEFERRED CREDITS AND OTHER LIABILITIES	93,594	94,258
CONTRIBUTIONS IN AID OF CONSTRUCTION	64,444	61,976
TOTAL CAPITALIZATION AND LIABILITIES	$ 542,498	$ 530,341

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Schedule of earnings per share

	Three Months Ended September 30,
	2014					2013
Basic:	Income			Shares			Income			Shares
Net Income	$	6,758			16,097		$	5,807			15,882
Preferred Dividend		(36	)					(44	)
Earnings Applicable to Common Stock	$	6,722			16,097		$	5,763			15,882
Basic EPS	$	0.42					$	0.36
Diluted:
Earnings Applicable to Common Stock	$	6,722			16,097		$	5,763			15,882
$7.00 Series Preferred Dividend		17			115			24			167
$8.00 Series Preferred Dividend		6			41			6			68
Adjusted Earnings Applicable to  Common Stock	$	6,745			16,253		$	5,793			16,117
Diluted EPS	$	0.42					$	0.36

	(In Thousands Except per Share Amounts)
	Nine Months Ended September 30,
	2014					2013
Basic:	Income			Shares			Income			Shares
Net Income	$	14,654			16,030		$	13,465			15,839
Preferred Dividend		(115	)					(147	)
Earnings Applicable to Common Stock	$	14,539			16,030		$	13,318			15,839
Basic EPS	$	0.91					$	0.84
Diluted:
Earnings Applicable to Common Stock	$	14,539			16,030		$	13,318			15,839
$7.00 Series Preferred Dividend		57			140			73			167
$8.00 Series Preferred Dividend		18			41			34			87
Adjusted Earnings Applicable to  Common Stock	$	14,614			16,211		$	13,425			16,093
Diluted EPS	$	0.90					$	0.83

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 31, 2014
Document And Entity Information [Abstract]
Entity Registrant Name	MIDDLESEX WATER CO
Entity Central Index Key	0000066004
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity Reporting Status Current	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		16,111,268
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2014

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Business Segment Data (Tables)

9 Months Ended

Sep. 30, 2014

Business Segment Data [Abstract]

Schedule of segment reporting information, by segment

	(In Thousands)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Operations by Segments:	2014			2013			2014			2013
Revenues:
Regulated	$	29,346		$	27,981		$	78,719		$	77,042
Non – Regulated		3,492			3,470			10,752			10,787
Inter-segment Elimination		(169	)		(166	)		(439	)		(405	)
Consolidated Revenues	$	32,669		$	31,285		$	89,032		$	87,424
Operating Income:
Regulated	$	11,039		$	9,685		$	24,585		$	22,699
Non – Regulated		581			585			1,748			1,607
Consolidated Operating Income	$	11,620		$	10,270		$	26,333		$	24,306
Net Income:
Regulated	$	6,458		$	5,505		$	13,753		$	12,648
Non – Regulated		300			302			901			817
Consolidated Net Income	$	6,758		$	5,807		$	14,654		$	13,465
Capital Expenditures:
Regulated	$	7,211		$	4,313		$	15,685		$	14,417
Non – Regulated		67			50			98			168
Total Capital Expenditures	$	7,278		$	4,363		$	15,783		$	14,585

	As of			As of
	September 30,			December 31,
	2014			2013
Assets:
Regulated	$	540,970		$	529,381
Non – Regulated		8,262			8,887
Inter-segment Elimination		(6,734	)		(7,927	)
Consolidated Assets	$	542,498		$	530,341

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$ 14,654	$ 13,465
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization	9,091	8,833
Provision for Deferred Income Taxes and Investment Tax Credits	2,107	2,536
Equity Portion of Allowance for Funds Used During Construction (AFUDC)	(138)	(149)
Cash Surrender Value of Life Insurance	(81)	(174)
Stock Compensation Expense	430	357
Changes in Assets and Liabilities:
Accounts Receivable	687	135
Unbilled Revenues	(1,775)	(1,510)
Materials & Supplies	(154)	(585)
Prepayments	(1,253)	(436)
Accounts Payable	867	566
Accrued Taxes	2,431	(42)
Accrued Interest	(720)	(513)
Employee Benefit Plans	(2,720)	(1,033)
Unearned Revenue and Advanced Service Fees	15	(1)
Other Assets and Liabilities	(1,002)	(284)
NET CASH PROVIDED BY OPERATING ACTIVITIES	22,439	21,165
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures, Including AFUDC of $75 in 2014, $81 in 2013	(15,783)	(14,585)
Restricted Cash	(965)	(360)
Distribution from / (Investment in) Joint Venture	782	(1,205)
NET CASH USED IN INVESTING ACTIVITIES	(15,966)	(16,150)
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt	(4,678)	(10,440)
Proceeds from Issuance of Long-term Debt	4,398	3,987
Net Short-term Bank Borrowings	2,050	2,500
Deferred Debt Issuance Expense	(69)	(55)
Restricted Cash		6,070
Proceeds from Issuance of Common Stock	1,120	1,257
Payment of Common Dividends	(9,130)	(8,902)
Payment of Preferred Dividends	(115)	(147)
Construction Advances and Contributions-Net	169	627
NET CASH USED IN FINANCING ACTIVITIES	(6,255)	(5,103)
NET CHANGES IN CASH AND CASH EQUIVALENTS	218	(88)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	4,834	3,025
CASH AND CASH EQUIVALENTS AT END OF PERIOD	5,052	2,937
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Utility Plant received as Construction Advances and Contributions	1,797	1,324
Long-term Debt Deobligation		64
Cash Paid During the Year for:
Interest	4,971	4,875
Interest Capitalized	75	81
Income Taxes	$ 3,775	$ 5,169

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Business Segment Data

9 Months Ended

Sep. 30, 2014

Business Segment Data [Abstract]

Business Segment Data

Note 5 – Business Segment Data

The Company has identified two reportable segments. One is the regulated business of collecting, treating and distributing water on a retail and wholesale basis to residential, commercial, industrial and fire protection customers in parts of New Jersey, Delaware and Pennsylvania. This segment also includes regulated wastewater systems in New Jersey and Delaware. The Company is subject to regulations as to its rates, services and other matters by New Jersey, Delaware and Pennsylvania with respect to utility services within these states. The other segment is primarily comprised of non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware. Inter-segment transactions relating to operational costs are treated as pass-through expenses. Finance charges on inter-segment loan activities are based on interest rates that are below what would normally be charged by a third party lender.

	(In Thousands)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Operations by Segments:	2014			2013			2014			2013
Revenues:
Regulated	$	29,346		$	27,981		$	78,719		$	77,042
Non – Regulated		3,492			3,470			10,752			10,787
Inter-segment Elimination		(169	)		(166	)		(439	)		(405	)
Consolidated Revenues	$	32,669		$	31,285		$	89,032		$	87,424
Operating Income:
Regulated	$	11,039		$	9,685		$	24,585		$	22,699
Non – Regulated		581			585			1,748			1,607
Consolidated Operating Income	$	11,620		$	10,270		$	26,333		$	24,306
Net Income:
Regulated	$	6,458		$	5,505		$	13,753		$	12,648
Non – Regulated		300			302			901			817
Consolidated Net Income	$	6,758		$	5,807		$	14,654		$	13,465
Capital Expenditures:
Regulated	$	7,211		$	4,313		$	15,685		$	14,417
Non – Regulated		67			50			98			168
Total Capital Expenditures	$	7,278		$	4,363		$	15,783		$	14,585

	As of			As of
	September 30,			December 31,
	2014			2013
Assets:
Regulated	$	540,970		$	529,381
Non – Regulated		8,262			8,887
Inter-segment Elimination		(6,734	)		(7,927	)
Consolidated Assets	$	542,498		$	530,341

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Earnings Per Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Note 4 – Earnings Per Share

Basic earnings per share (EPS) are computed on the basis of the weighted average number of shares outstanding during the period presented. Diluted EPS assumes the conversion of both the Convertible Preferred Stock $7.00 Series and the Convertible Preferred Stock $8.00 Series.

	Three Months Ended September 30,
	2014					2013
Basic:	Income			Shares			Income			Shares
Net Income	$	6,758			16,097		$	5,807			15,882
Preferred Dividend		(36	)					(44	)
Earnings Applicable to Common Stock	$	6,722			16,097		$	5,763			15,882
Basic EPS	$	0.42					$	0.36
Diluted:
Earnings Applicable to Common Stock	$	6,722			16,097		$	5,763			15,882
$7.00 Series Preferred Dividend		17			115			24			167
$8.00 Series Preferred Dividend		6			41			6			68
Adjusted Earnings Applicable to  Common Stock	$	6,745			16,253		$	5,793			16,117
Diluted EPS	$	0.42					$	0.36

	(In Thousands Except per Share Amounts)
	Nine Months Ended September 30,
	2014					2013
Basic:	Income			Shares			Income			Shares
Net Income	$	14,654			16,030		$	13,465			15,839
Preferred Dividend		(115	)					(147	)
Earnings Applicable to Common Stock	$	14,539			16,030		$	13,318			15,839
Basic EPS	$	0.91					$	0.84
Diluted:
Earnings Applicable to Common Stock	$	14,539			16,030		$	13,318			15,839
$7.00 Series Preferred Dividend		57			140			73			167
$8.00 Series Preferred Dividend		18			41			34			87
Adjusted Earnings Applicable to  Common Stock	$	14,614			16,211		$	13,425			16,093
Diluted EPS	$	0.90					$	0.83

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Capitalization (Narrative) (Details) (USD $)	9 Months Ended				1 Months Ended	9 Months Ended	1 Months Ended	9 Months Ended	1 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Oct. 31, 2014 Tidewater [Member]	May 31, 2014 First Mortgage Bonds - Series VV [Member]	Sep. 30, 2014 First Mortgage Bonds - Series VV [Member]	May 31, 2014 First Mortgage Bonds - Series WW [Member]	Sep. 30, 2014 First Mortgage Bonds - Series WW [Member]	May 31, 2014 New Jersey Environmental Infrastructure Trust [Member]	Sep. 30, 2014 Convertible Preferred Stock $7.00 Series [Member]
Schedule of Capitalization [Line Items]
Issuance of shares under the DRP	$ 1,100,000	$ 1,300,000
Issuance of shares under the DRP,shares	54,627	63,649
Proceeds from long-term debt borrowing	4,398,000	3,987,000							3,800,000
Issuance of series bonds					2,800,000		900,000
Interest rate						0.00%
Interest rate - minimum								3.00%
Interest rate - maximum								5.00%
Due date of debt						Aug. 01, 2033		Aug. 01, 2033
Number of shares converted										4,293
Value of shares converted										500,000
Number of shares of common stock issued upon conversion	51,516
Loan amount				15,000,000
Other long term debt	43,700,000		45,000,000
Customer advances	$ 21,336,000		$ 21,837,000

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Short-term Borrowings (Tables)

9 Months Ended

Sep. 30, 2014

Short-term Borrowings [Abstract]

Schedule of weighted average daily amounts of borrowings outstanding

The weighted average daily amounts of borrowings outstanding under the Company's credit lines and the weighted average interest rates on those amounts were as follows:

	(In Thousands)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013				2014			2013
Average Daily Amounts Outstanding	$	28,832		$	28,608			$	27,906		$	27,472
Weighted Average Interest Rates		1.44	%		1.32	%			1.44	%		1.35	%

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Employee Benefit Plans

9 Months Ended

Sep. 30, 2014

Employee Benefit Plans [Abstract]

Employee Benefit Plans

Note 8 – Employee Benefit Plans

Pension Benefits

The Company maintains a defined benefit pension plan (Pension Plan) which covers all active employees hired prior to March 31, 2007. Employees hired after March 31, 2007 are not eligible to participate in this plan, but do participate in a defined contribution plan that provides a discretionary annual contribution into a self-directed retirement account based upon a percentage of the participants' base compensation. In order to be eligible for contribution, the participating employee must be employed by the Company on December 31st of the year to which the award relates. For the three months ended September 30, 2014 and 2013, the Company made cash contributions to the Pension Plan of $1.3 million and $1.9 million, respectively. For the nine months ended September 30, 2014 and 2013, the Company made cash contributions to the Pension Plan of $2.5 million and $2.6 million, respectively. The Company expects to make additional cash contributions to the Pension Plan of approximately $0.8 million over the remainder of the current year. The Company also maintains an unfunded supplemental retirement benefit plan for certain active and retired Company officers and currently pays $0.3 million in annual benefits to the retired participants.

Other Postretirement Benefits

The Company maintains a postretirement plan other than pensions (Other Benefits Plan) which covers substantially all of its retired employees. Employees hired after March 31, 2007 are not eligible to participate in this plan. Coverage includes healthcare and life insurance. For the three months ended September 30, 2014 and 2013, the Company made cash contributions to the Other Benefits Plan of $0.5 million and $1.0 million, respectively. For the nine months ended September 30, 2014 and 2013, the Company made cash contributions to the Other Benefits Plan of $0.9 million and $1.7 million, respectively. The Company expects to make additional cash contributions to the Other Benefits Plan of approximately $0.3 million over the remainder of the current year.

The following tables set forth information relating to the Company's periodic costs for its employee retirement benefit plans:

	(In Thousands)
	Pension Benefits						Other Benefits
	Three Months Ended September 30,
	2014			2013				2014			2013
Service Cost	$	473		$	575			$	258		$	334
Interest Cost		670			617				448			399
Expected Return on Assets		(883	)		(724	)			(484	)		(406	)
Amortization of Unrecognized Losses		104			408				353			516
Amortization of Unrecognized Prior Service Cost (Credit)		1			2				(432	)		(432	)
Net Periodic Benefit Cost	$	365		$	878			$	143		$	411

	(In Thousands)
	Pension Benefits						Other Benefits
	Nine Months Ended September 30,
	2014			2013				2014			2013
Service Cost	$	1,420		$	1,725			$	774		$	1,003
Interest Cost		2,011			1,851				1,344			1,196
Expected Return on Assets		(2,650	)		(2,171	)			(1,453	)		(1,217	)
Amortization of Unrecognized Losses		312			1,224				1,060			1,549
Amortization of Unrecognized Prior Service Cost (Credit)		2			7				(1,296	)		(1,296	)
Net Periodic Benefit Cost	$	1,095		$	2,636			$	429		$	1,235

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Short-term Borrowings

9 Months Ended

Sep. 30, 2014

Short-term Borrowings [Abstract]

Short-term Borrowings

Note 6 – Short-term Borrowings

As of September 30, 2014, the Company has established lines of credit aggregating $60.0 million. At September 30, 2014, the outstanding borrowings under these credit lines were $30.5 million at a weighted average interest rate of 1.47%.

The weighted average daily amounts of borrowings outstanding under the Company's credit lines and the weighted average interest rates on those amounts were as follows:

	(In Thousands)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013				2014			2013
Average Daily Amounts Outstanding	$	28,832		$	28,608			$	27,906		$	27,472
Weighted Average Interest Rates		1.44	%		1.32	%			1.44	%		1.35	%

The maturity dates for the $30.5 million outstanding as of September 30, 2014 are all in October 2014 and are extendable at the discretion of the Company.

Interest rates for short-term borrowings under the lines of credit are below the prime rate with no requirement for compensating balances.
 

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Commitments and Contingent Liabilities

9 Months Ended

Sep. 30, 2014

Commitments and Contingent Liabilities [Abstract]

Commitments and Contingent Liabilities

Note 7 – Commitments and Contingent Liabilities

Water Supply

Middlesex has an agreement with the New Jersey Water Supply Authority (NJWSA) for the purchase of untreated water through November 30, 2023, which provides for an average purchase of 27 million gallons a day (mgd). Pricing is set annually by the NJWSA through a public rate making process. The agreement has provisions for additional pricing in the event Middlesex overdrafts or exceeds certain monthly and annual thresholds.

Middlesex also has an agreement with a non-affiliated regulated water utility for the purchase of treated water. This agreement, which expires February 27, 2016, provides for the minimum purchase of 3 mgd of treated water with provisions for additional purchases.

Purchased water costs are shown below:

	(In Thousands)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013			2014		2013
Treated	$	764	$	780		$	2,344	$	2,303
Untreated		642		618			1,763		1,739
Total Costs	$	1,406	$	1,398		$	4,107	$	4,042

Contract Operations - USA-PA operates the City of Perth Amboy, New Jersey's water and wastewater systems under a 20-year agreement, which expires in 2018. In connection with the agreement with Perth Amboy, USA-PA entered into a 20-year subcontract with a wastewater operating company for the operation and maintenance of the Perth Amboy wastewater collection system. The subcontract provides for the sharing of certain fixed and variable fees and operating expenses.

Guarantees -In September 2013, Middlesex entered into agreements with Applied Water Management, Inc. (AWM), Natural Systems Utilities, LLC (NSU), the parent company of AWM, and the County of Monmouth, New Jersey (Monmouth County) for the design, construction and operation of a leachate pretreatment facility at the Monmouth County Reclamation Center in Tinton Falls, New Jersey. Under the terms of the agreements, AWM will obtain permits, design, build and operate the landfill leachate pretreatment facility and Middlesex will serve in the role of guarantor of AWM's performance on the project, in addition to providing operational support. Construction of the facility is being financed by Monmouth County and began in September 2014. Middlesex expects to act as guarantor of AWM's performance through at least August 2018 and is contractually obligated to act as guarantor of AWM's performance through 2028 unless another guarantor, acceptable to Monmouth County, is identified.  Under agreements with AWM and NSU, Middlesex earns a fee for providing the guaranty of AWM's performance to Monmouth County, and AWM and NSU, serving as guarantor to Middlesex with respect to the performance of AWM, indemnify Middlesex against any claims that may arise under the Middlesex guaranty to Monmouth County.

Middlesex believes it is unlikely any payments would need to be made under Middlesex's guaranty of AWM's performance to Monmouth County. If asked to perform under the guaranty to Monmouth County, and, if AWM and NSU, as guarantor to Middlesex, do not fulfill their obligations to indemnify Middlesex against any claims that may arise under the Middlesex guaranty to Monmouth County, Middlesex would be required to fulfill the construction and operational commitments of AWM. As of September 30, 2014, and December 31, 2013, the liability recognized in Other Non-Current Liabilities on the balance sheet for the guaranty is approximately $0.3 million and $0.4 million, respectively.

Construction

The Company expects to spend approximately $26.6 million for its construction program in 2014. The actual timing and amount of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain projects.

Litigation

The Company is a defendant in lawsuits in the normal course of business. We believe the resolution of pending claims and legal proceedings will not have a material adverse effect on the Company's consolidated financial statements.

Change in Control Agreements

The Company has Change in Control Agreements with certain of its officers that provide compensation and benefits in the event of termination of employment in connection with a change in control of the Company.

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Capitalization (Tables)

9 Months Ended

Sep. 30, 2014

Capitalization [Abstract]

Schedule of carrying amount and fair value of bonds

The carrying amount and fair value of the Company's bonds were as follows:

	September 30, 2014				December 31, 2013
	Carrying		Fair			Carrying		Fair
	Amount		Value			Amount		Value
First Mortgage Bonds	$	88,628	$	88,532		$	87,471	$	79,733
SRF Bonds	$	540	$	542		$	625	$	628

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Employee Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2014

Employee Benefit Plans [Abstract]

Schedule of periodic costs for employee retirement benefit plan

The following tables set forth information relating to the Company's periodic costs for its employee retirement benefit plans:

	(In Thousands)
	Pension Benefits						Other Benefits
	Three Months Ended September 30,
	2014			2013				2014			2013
Service Cost	$	473		$	575			$	258		$	334
Interest Cost		670			617				448			399
Expected Return on Assets		(883	)		(724	)			(484	)		(406	)
Amortization of Unrecognized Losses		104			408				353			516
Amortization of Unrecognized Prior Service Cost (Credit)		1			2				(432	)		(432	)
Net Periodic Benefit Cost	$	365		$	878			$	143		$	411

	(In Thousands)
	Pension Benefits						Other Benefits
	Nine Months Ended September 30,
	2014			2013				2014			2013
Service Cost	$	1,420		$	1,725			$	774		$	1,003
Interest Cost		2,011			1,851				1,344			1,196
Expected Return on Assets		(2,650	)		(2,171	)			(1,453	)		(1,217	)
Amortization of Unrecognized Losses		312			1,224				1,060			1,549
Amortization of Unrecognized Prior Service Cost (Credit)		2			7				(1,296	)		(1,296	)
Net Periodic Benefit Cost	$	1,095		$	2,636			$	429		$	1,235

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Business Segment Data (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 N	Sep. 30, 2013	Dec. 31, 2013
Segment Reporting Information [Line Items]
Number of Reportable Segments			2
Operating Revenues	$ 32,669	$ 31,285	$ 89,032	$ 87,424
Operating Income	11,620	10,270	26,333	24,306
Net Income	6,758	5,807	14,654	13,465
Capital Expenditures	7,278	4,363	15,783	14,585
Assets	542,498		542,498		530,341
Regulated [Member]
Segment Reporting Information [Line Items]
Operating Revenues	29,346	27,981	78,719	77,042
Operating Income	11,039	9,685	24,585	22,699
Net Income	6,458	5,505	13,753	12,648
Capital Expenditures	7,211	4,313	15,685	14,417
Assets	540,970		540,970		529,381
Non - Regulated [Member]
Segment Reporting Information [Line Items]
Operating Revenues	3,492	3,470	10,752	10,787
Operating Income	581	585	1,748	1,607
Net Income	300	302	901	817
Capital Expenditures	67	50	98	168
Assets	8,262		8,262		8,887
Inter-segment Elimination [Member]
Segment Reporting Information [Line Items]
Operating Revenues	(169)	(166)	(439)	(405)
Assets	$ (6,734)		$ (6,734)		$ (7,927)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) [Abstract]
Allowance for funds used during construction	$ 75	$ 81

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Capitalization

9 Months Ended

Sep. 30, 2014

Capitalization [Abstract]

Capitalization

Note 3 – Capitalization

Common Stock

During the nine months ended September 30, 2014 and 2013, there were 54,627 common shares (approximately $1.1 million) and 63,649 common shares (approximately $1.3 million), respectively, issued under the Company's Amended and Restated Dividend Reinvestment and Common Stock Purchase Plan.

For the nine months ended September 30, 2014, 4,293 shares (approximately $0.5 million) of the Company's no par $7.00 Series Cumulative and Convertible Preferred Stock were converted into 51,516 shares of common stock.

Long-term Debt

In May 2014, Middlesex borrowed approximately $3.8 million through the New Jersey Environmental Infrastructure Trust under the New Jersey State Revolving Fund (SRF) loan program and issued first mortgage bonds designated as Series VV (approximately $2.8 million) and Series WW ( approximately $0.9 million). The interest rate on the Series VV bond is zero and the interest rate on the Series WW bond ranges from 3.0% to 5.0% depending on the serial maturity date. The final maturity date for both bonds is August 1, 2033. Proceeds were recorded as Restricted Cash and may only be used for the Middlesex 2014 RENEW project, which is part of a program to clean and cement all unlined mains in the Middlesex system.

In October 2014, Tidewater closed on a $15.0 million DEPSC-approved loan. Tidewater can borrow the $15.0 million in whole or in increments at its discretion until April 30, 2015, at an interest rate based on market conditions at the time of borrowing with a maximum final maturity date of April 1, 2040. Proceeds from the loan will be used to retire short-term borrowings and also fund Tidewater's ongoing capital program.

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments for which it is practicable to estimate that value. The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade receivables, accounts payable and notes payable approximate their respective fair values due to the short-term maturities of these instruments. The fair value of the Company's long-term debt relating to First Mortgage and SRF Bonds (Bonds) is based on quoted market prices for similar issues. Under the fair value hierarchy, the fair value of cash and cash equivalents is classified as a Level 1 measurement and the fair value of the Bonds in the table below are classified as Level 2 measurements.

The carrying amount and fair value of the Company's bonds were as follows:

	September 30, 2014				December 31, 2013
	Carrying		Fair			Carrying		Fair
	Amount		Value			Amount		Value
First Mortgage Bonds	$	88,628	$	88,532		$	87,471	$	79,733
SRF Bonds	$	540	$	542		$	625	$	628

For other long-term debt for which there was no quoted market price and there is not an active trading market, it was not practicable to estimate their fair value (for details, including carrying value, interest rate and due date on these series of long-term debt, please refer to those series noted as “Amortizing Secured Note” and “State Revolving Trust Note” on the Condensed Consolidated Statements of Capital Stock and Long-Term Debt). The carrying amount of these instruments was $43.7 million at September 30, 2014 and $45.0 million at December 31, 2013. Customer advances for construction have carrying amounts of $21.3 million and $21.8 million, respectively, at September 30, 2014 and December 31, 2013. Their relative fair values cannot be accurately estimated since future refund payments depend on several variables, including new customer connections, customer consumption levels and future rate increases.

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Short-term Borrowings (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014
Lines Of Credit Facility
Established lines of credit	$ 60.0
Established lines of credit, amount outstanding	$ 30.5
Weighted average interest rate at period end	1.47%

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Commitments and Contingent Liabilities (Tables)

9 Months Ended

Sep. 30, 2014

Commitments and Contingent Liabilities [Abstract]

Schedule of purchased water cost

Purchased water costs are shown below:

	(In Thousands)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013			2014		2013
Treated	$	764	$	780		$	2,344	$	2,303
Untreated		642		618			1,763		1,739
Total Costs	$	1,406	$	1,398		$	4,107	$	4,042