XML 36 R18.htm IDEA: XBRL DOCUMENT v3.25.0.1
Employee Benefit Plans
 12 Months Ended
Dec. 31, 2024
Employee Benefit Plans [Abstract]  
Employee Benefit Plans

Note 7 - Employee Benefit Plans

 

Pension Benefits

 

The Company’s Pension Plan covers all active employees hired prior to April 1, 2007. Employees hired after March 31, 2007 are not eligible to participate in this plan, but can participate in a defined contribution profit sharing plan that provides an annual contribution at the discretion of the Company, based upon a percentage of the participants’ annual paid compensation. In order to be eligible for contribution, the eligible employee must be employed by the Company on December 31st of the year to which the contribution relates. The Company maintains an unfunded supplemental plan for a limited number of its executive officers. The Accumulated Benefit Obligation for the Company’s Pension Plan at December 31, 2024 and 2023 was $80.8 million and $83.7 million, respectively.

 

Other Benefits

 

The Company’s Other Benefits Plan covers substantially all of its current retired employees. Employees hired after March 31, 2007 are not eligible to participate in this plan. Coverage includes healthcare and life insurance.

 

Regulatory Treatment of Over/Underfunded Retirement Obligations

 

Because the Company is subject to rate regulation in the states in which it operates, it is required to maintain its accounts in accordance with the regulatory authority’s rules and guidelines, which may differ from other authoritative accounting pronouncements. In those instances, the Company follows the guidance of ASC 980, Regulated Operations. Based on prior regulatory practice, and in accordance with the guidance in ASC 980, Regulated Operations, the Company records underfunded Pension Plan and Other Benefits Plan obligation costs, which otherwise would be recognized in Other Comprehensive Income under ASC 715, Compensation – Retirement Benefits, as a Regulatory Asset, and expects to recover those costs in rates charged to customers.

 

The Company uses a December 31 measurement date for all of its employee benefit plans. The tables below set forth information relating to the Company’s Pension Plan and Other Benefits Plan for 2024 and 2023.

 

   (In Thousands)
   Pension Plan  Other Benefits Plan
   Years Ended December 31,
   2024  2023  2024  2023
Change in Projected Benefit Obligation:                    
Beginning Balance  $91,853   $87,788   $28,000   $32,909 
Service Cost   1,270    1,551    320    391 
Interest Cost   4,280    4,270    1,313    1,608 
Actuarial (Gain) Loss   (5,478)   1,966    (486)   (5,968)
Benefits Paid   (4,424)   (3,722)   (946)   (940)
Ending Balance  $87,501   $91,853   $28,201   $28,000 
   (In Thousands)
   Pension Plan  Other Benefits Plan
   Years Ended December 31,
   2024  2023  2024  2023
Change in Fair Value of Plan Assets:                    
Beginning Balance  $92,346   $84,828   $48,352   $44,029 
Actual Return on Plan Assets   7,976    10,840    4,675    4,323 
Employer Contributions   2,750    400    946    940 
Benefits Paid   (4,424)   (3,722)   (946)   (940)
Ending Balance  $98,648   $92,346   $53,027   $48,352 
                     
Funded Status  $11,147   $494   $24,826   $20,352 

 

   (In Thousands)
   Pension Plan  Other Benefits Plan
   As of December 31,
   2024  2023  2024  2023
Amounts Recognized in the Consolidated                    
Balance Sheets consist of:                    
Current Liability  $883   $933   $
—
   $
—
 
Noncurrent Asset   (12,030)   (1,427)   (24,826)   (20,352)
Net Asset Recognized  $(11,147)  $(494)  $(24,826)  $(20,352)

 

   (InThousands)
   Pension Plan  Other Benefits Plan
   Years Ended December 31,
   2024  2023  2022  2024  2023  2022
Components of Net Periodic Benefit Cost                  
Service Cost  $1,270   $1,551   $2,362   $320   $391   $799 
Interest Cost   4,280    4,270    3,042    1,313    1,608    1,325 
Expected Return on Plan Assets   (6,322)   (5,865)   (7,041)   (3,384)   (3,082)   (3,547)
Amortization of Net Actuarial Loss (Gain)   153    658    1,674    (1,098)   (191)   
—
 
Net Periodic Benefit Cost*  $(619)  $614   $37   $(2,849)  $(1,274)  $(1,423)

 

*Service cost is included in Operations and Maintenance expense on the consolidated statements of income; all other amounts are included in Other Income, net.

 

Amounts that are expected to be amortized from Regulatory Assets into Net Periodic Benefit Cost in 2025 are as follows:

 

   (In Thousands)
   Pension
Plan 		  Other
Benefits
Plan
Actuarial Loss (Gain)  $50   $(1,127)

The discount rate and compensation increase rate for determining our postretirement benefit plans’ benefit obligations and costs as of and for the years ended December 31, 2024, 2023 and 2022, respectively, are as follows:

 

   Pension Plan   Other Benefits Plan 
   2024   2023   2022   2024   2023   2022 
Weighted Average Assumptions:                              
Expected Return on Plan Assets   7.00%    7.00%    7.00%    7.00%    7.00%    7.00% 
Discount Rate for:                              
Benefit Obligation   5.47%    4.79%    4.98%    5.49%    4.79%    4.98% 
Benefit Cost   4.79%    4.98%    2.72%    4.79%    4.98%    2.72% 
Compensation Increase for:                              
Benefit Obligation   3.00%    3.00%    3.00%    3.00%    3.00%    3.00% 
Benefit Cost   3.00%    3.00%    3.00%    3.00%    3.00%    3.00% 

 

The compensation increase assumption for the Other Benefits Plan is attributable to life insurance provided to qualifying employees upon their retirement. The insurance coverage will be determined based on the employee’s base compensation as of their retirement date.

 

The Company utilizes the Society of Actuaries’ mortality table (Pri-2012) (Mortality Improvement Scale MP2021).

 

For the 2024 valuation, costs and obligations for our Other Benefits Plan assumed a 8.0% annual rate of increase in the per capita cost of covered healthcare benefits in 2024 with the annual rate of increase declining 0.15% per year for 2025-2044, resulting in an annual rate of increase in the per capita cost of covered healthcare benefits of 5.0% by year 2045.

 

A one-percentage point change in assumed healthcare cost trend rates would have the following effects on the Other Benefits Plan:

 

   (In Thousands)
   1 Percentage Point
   Increase  Decrease
Effect on Current Year Service and Interest Costs  $228   $(184)
Effect on Projected Benefit Obligation  $3,434   $(2,824)

 

The following benefit payments, which reflect expected future service, are expected to be paid:

 

   (In Thousands)
Year  Pension Plan  Other Benefits Plan
2025  $5,412   $1,303 
2026   5,399    1,368 
2027   5,479    1,410 
2028   5,595    1,444 
2029   5,581    1,541 
2030-2034   29,746    8,682 
Totals  $57,212   $15,748 

Benefit Plans Assets

 

The allocation of plan assets at December 31, 2024 and 2023 by asset category is as follows:

 

   Pension Plan   Other Benefits Plan 
Asset Category  2024   2023   Target   2024   2023   Target 
Equity Securities   31.8%    58.1%    30%    65.2%    60.9%    43% 
Debt Securities   67.9%    39.6%    68%    33.0%    36.1%    50% 
Cash   0.3%    0.7%    2%    1.8%    3.0%    2% 
Real Estate/Commodities   0.0%    1.6%    0%    0.0%    0.0%    5% 
Total   100.0%    100.0%    
 
    100.0%    100.0%    
 
 

 

Two outside investment firms each manage a portion of the Pension Plan asset portfolio. One of those investment firms also manages the Other Benefits Plan asset portfolio. Quarterly meetings are held between the Company’s Pension Committee of the Board of Directors and the investment managers to review their performance and asset allocation. If the actual asset allocation is outside the targeted range, the Pension Committee reviews current market conditions and advice provided by the investment managers to determine the appropriateness of rebalancing the portfolio.

 

The objective of the Company is to maximize the long-term return on retirement plan assets, relative to a reasonable level of risk, maintain a diversified investment portfolio and maintain compliance with the Employee Retirement Income Security Act of 1974. The expected long-term rate of return is based on the various asset categories in which plan assets are invested and the current expectations and historical performance for these categories.

 

Fair Value Measurements

 

Accounting guidance provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:

 

● Level 1 – Inputs to the valuation methodology are unadjusted quoted market prices for identical assets or liabilities in accessible active markets.
● Level 2 – Inputs to the valuation methodology that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.  If the asset or liability has a specified contractual term, the Level 2 input must be observable for substantially the full term of the asset or liability.
● Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

Certain investments in cash and cash equivalents, equity securities, and commodities are valued based on quoted market prices in active markets and are classified as Level 1 investments. Certain investments in cash and cash equivalents, equity securities and fixed income securities are valued using prices received from pricing vendors that utilize observable inputs and are therefore classified as Level 2 investments.

The following tables present Middlesex’s Pension Plan assets measured and recorded at fair value within the fair value hierarchy:

 

   (In Thousands) 
   As of December 31, 2024 
   Level 1   Level 2   Level 3   Total 
Mutual Funds  $31,187   $
—
   $
—
   $31,187 
Money Market Funds   293    
—
    
—
    293 
Common Equity Securities   195    
—
    
—
    195 
Corporate Bonds   42,974    
—
    
—
    42,974 
Agency/US Debt   19,041    
—
    
—
    19,041 
Sovereign/Non-US Debt   4,958    
—
    
—
    4,958 
Total Investments  $98,648   $
—
   $
—
   $98,648 

 

   (In Thousands) 
   As of December 31, 2023 
   Level 1   Level 2   Level 3   Total 
Mutual Funds  $71,236   $
—
   $
—
   $71,236 
Money Market Funds   663    
—
    
—
    663 
Common Equity Securities   12,544    
—
    
—
    12,544 
Corporate Bonds   5,091    
—
    
—
    5,091 
Agency/US Debt   1,854    
—
    
—
    1,854 
Sovereign/Non-US Debt   958    
—
    
—
    958 
Total Investments  $92,346   $
—
   $
—
   $92,346 

 

The following tables present Middlesex’s Other Benefits Plan assets measured and recorded at fair value within the fair value hierarchy:

 

   (In Thousands) 
   As of December 31, 2024 
   Level 1   Level 2   Level 3   Total 
Mutual Funds  $34,545   $
—
   $
—
   $34,545 
Money Market Funds   977    
—
    
—
    977 
Agency/US/State/Municipal Debt   
—
    17,505    
—
    17,505 
Total Investments  $35,522   $17,505   $
—
   $53,027 

 

   (In Thousands) 
   As of December 31, 2023 
   Level 1   Level 2   Level 3   Total 
Mutual Funds  $29,437   $
—
   $
—
   $29,437 
Money Market Funds   1,429    
—
    
—
    1,429 
Agency/US/State/Municipal Debt   
—
    17,486    
—
    17,486 
Total Investments  $30,866   $17,486   $
—
   $48,352 

Benefit Plans Contributions

 

For the Pension Plan, Middlesex made total cash contributions of $2.8 million in 2024 and expects to make approximately $0.9 million of cash contributions in 2025.

 

For the Other Benefits Plan, Middlesex made total cash contributions of $0.9 million in 2024 and expects to make approximately $1.0 million of cash contributions in 2025.

 

401(k) Plan

 

The Company maintains a 401(k) defined contribution plan, which covers substantially all employees (temporary employee needs to complete at least 1,000 hours of service to be eligible). Under the terms of the plan, the Company matches 100% of a participant’s contributions, which do not exceed 1% of a participant’s compensation, plus 50% of a participant’s contributions exceeding 1%, but not more than 6%. The Company’s matching contribution was $0.8 million, $0.8 million and $0.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

 

Employees hired after March 31, 2007 are not eligible to participate in the Pension Plan and are generally eligible to participate in a discretionary profit sharing plan administered through the 401(k) plan. In December each year, the Board of Directors may approve that a stated percentage of eligible compensation be contributed to the account of the employee participant in the first quarter of the following year. For those employees still actively employed on December 31, 2024 or retired during the current year, the Company will fund a discretionary contribution of $1.1 million before April 1, 2025, which represents 5.0% of eligible 2024 compensation. For the years ended December 31, 2023 and 2022, the Company made qualifying discretionary contributions of $0.9 million for each year.

 

Stock-Based Compensation

 

The Company maintains a long-term incentive compensation plan for certain management employees where awards are made in the form of restricted common stock. Shares of restricted stock issued under the plan are subject to forfeiture by the employee in the event of termination of employment for any reason within three or five years of the award, as applicable, other than as a result of retirement at normal retirement age, death, disability or change in control. The maximum number of shares authorized for award under the plan is 300,000 shares, of which approximately 70% remain available for issuance.

 

The Company recognizes compensation expense at fair value for the plan awards in accordance with ASC 718, Compensation – Stock Compensation. Compensation expense is determined by the market value of the stock on the date of the award and is being amortized over the expected vesting period.

The following table presents awarded but not yet vested share information for the plan:

 

   Shares(thousands)   Unearned
Compensation
(thousands)		   Weighted
Average Granted
Price		 
Balance, January 1, 2022   83   $1,931      
Granted   11    1,151   $105.17 
Vested   (17)          
Amortization of Compensation expense   
—
    (1,350)     
Balance, December 31, 2022   77    1,732      
Granted   15    1,165   $77.63 
Vested   (18)   
—
      
Amortization of Compensation expense   
—
    (1,854)     
Balance, December 31, 2023   74    1,043      
Granted   19    1,003   $52.50 
Vested   (58)   
—
      
Amortization of Compensation expense   
—
    (1,140)     
Balance, December 31, 2024   35   $906      

 

Unearned compensation is recognized over a period of 4 years.