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Commitments and Contingent Liabilities | 3 Months Ended
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Mar. 31, 2021
Commitments and Contingencies Disclosure [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 27.0 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 has an agreement with a non-affiliated regulated water utility for the purchase of treated water. This agreement, which expires February 27, 2026, provides for the minimum purchase of 3.0 mgd of treated water with provisions for additional purchases. Tidewater contracts with the City of Dover, Delaware to purchase 15.0 million gallons of treated water annually. Purchased water costs are shown below:
| (In Thousands) |
| Three Months Ended |
| March 31, |
|  | 2021 |  |  | 2020 |
Treated |  | $ | 877 |  |  | $ | 793 |
Untreated |  |  | 861 |  |  |  | 870 |
Total Costs |  | $ | 1,738 |  |  | $ | 1,663 |
11 Index Guarantees - As part of an agreement with the County of Monmouth, New Jersey (County), prior to 2020 Middlesex had served as guarantor of the performance of an unaffiliated wastewater treatment contractor and partner (Contractor), to operate a County-owned leachate pretreatment facility. In November 2019, Middlesex was notified that the County terminated its Agreement with the Contractor. The Contractor had initiated legal action against the County that in part contests the County’s exercise of this termination. The County filed a counter-claim against the Contractor’s parent company and has brought Middlesex into the suit as a third-party defendant. We continue to monitor this litigation; however, given the cancellation of the underlying operating contract by the County and the continuation of the litigation matter, we do not anticipate having to perform under the guaranty nor do we anticipate the ultimate outcome will have a material impact on the Company’s results of operations or financial condition. Leases - The Company determines if an arrangement is a lease at inception. Generally, a lease agreement exists if the Company determines that the arrangement gives the Company control over the use of an identified asset and obtains substantially all of the benefits from the identified asset. The Company has entered into an operating lease of office space for administrative purposes, expiring in 2030. The Company has not entered into any finance leases. The exercise of a lease renewal option for the Company’s administrative offices is solely at the discretion of the Company. The right-of-use (ROU) asset recorded represents the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company’s operating lease does not provide an implicit discount rate and as such the Company used an estimated incremental borrowing rate (4.03%) based on the information available at commencement date in determining the present value of lease payments. Given the impacts of accounting for regulated operations, and the resulting recognition of expense at the amounts recovered in customer rates, expenditures for operating leases are consistent with lease expense and were $0.2 million for each of the three months ended March 31, 2021 and 2020, respectively. Information related to operating lease ROU assets and lease liabilities is as follows:
|  | (In Millions) |
|  | As of |
|  | March 31, 2021 |  | December 31, 2020 |
ROU Asset at Lease Inception |  | $ | 7.3 |  |  | $ | 7.3 |  |
Accumulated Amortization |  |  | (2.3 | ) |  |  | (2.1 | ) |
Current ROU Asset |  | $ | 5.0 |  |  | $ | 5.2 |  |
12 Index The Company’s future minimum operating lease commitments as of March 31, 2021 are as follows:
|  |  | (In Millions)
2021 |  |  | $ | 0.6 |
2022 |  |  |  | 0.8 |
2023 |  |  |  | 0.8 |
2024 |  |  |  | 0.8 |
2025 |  |  |  | 0.8 |
Thereafter |  |  |  | 3.6 |
Total Lease Payments |  |  | $ | 7.4 |
Imputed Interest |  |  |  | (1.8 | )
Present Value of Lease Payments |  |  |  | 5.6 |
Less Current Portion* |  |  |  | (0.7 | )
Non-Current Lease Liability |  |  | $ | 4.9 |
*Included in Other Current Liabilities |  |  |  |  |
Construction - The Company has forecasted to spend approximately $121 million for its construction program in 2021. The Company has entered into several construction contracts that, in the aggregate, obligate expenditure of an estimated $17 million in the future. The timing and amount of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain projects. Contingencies - Based on our operations in the heavily-regulated water and wastewater industries, the Company is routinely involved in disputes, claims, lawsuits and other regulatory and legal matters, including responsibility for fines and penalties relative to regulatory compliance. At this time, Management does not believe the final resolution of any such matters, whether asserted or unasserted, will have a material adverse effect on the Company’s financial position, results of operations or cash flows. In addition, the Company maintains business insurance coverage that may mitigate the effect of any current or future loss contingencies. 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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