REGULATORY ASSETS

6 Months Ended

Jun. 30, 2011

Regulatory Assets and Liabilities Disclosure [Abstract]

NOTE 4 - REGULATORY ASSETS

FASB ASC Topic 980 stipulates generally accepted accounting principles for companies whose rates are established or subject to approvals by a third-party regulatory agency. Certain expenses are recoverable through rates charged to our customers, without a return on investment, and are deferred and amortized during future periods using various methods as permitted by the Delaware Public Service Commission, or DEPSC, the MDPSC and the PAPUC. Depreciation and salary study expenses are amortized on a straight-line basis over a period of five years, while all other expenses related to rate proceedings and applications to increase rates are amortized on a straight-line basis over a period of two years. The postretirement benefit obligation, which is being amortized over twenty years, is adjusted for the difference between the net periodic postretirement benefit costs and the cash payments. The amount recognized in the consolidated financial statements is determined on an actuarial basis, which uses assumptions about inflation, mortality, medical trend rates and discount rates. The deferred income taxes will be amortized over future years as the tax effects of temporary differences previously flowed through to the customers reverse. Goodwill is entirely associated with the acquisition of Mountain Hill in August 2008 and is currently being amortized on a straight-line basis over a period of fifty years. The purchase price of Mountain Hill included reimbursement of all carrying costs through the date of acquisition, which resulted in the recognition of goodwill. Deferred acquisition costs are the result of due diligence costs related to the proposed purchase agreements for water and wastewater facilities in Cecil County, Maryland and the November 2010 purchase of the Port Deposit, Maryland water assets. Amortization of these deferred acquisition costs begin once the acquired assets are placed into service.

Regulatory assets, net of amortization, comprise:
	Unaudited
	(in thousands)
	June 30, 2011			December 31, 2010

Postretirement benefit obligation		$	530		$	637
Deferred income taxes recoverable in future rates			514			521
Goodwill			352			355
Deferred acquisition costs			1,018			1,009
Expense of rate and regulatory proceedings			231			88
		$	2,645		$	2,610

Expenses related to the Net Periodic Pension Cost for the postretirement benefit obligation are as follows:

	Unaudited
	(in thousands)
For the Six Months Ended June 30,
	2011		2010
Net Periodic Pension Cost
Interest cost	$	17	$	22
Amortization of net loss (gain)		7		(2	)
Amortization of transition obligation		4		4

Total Net Periodic Benefit Cost	$	28	$	24

Contributions

Artesian Water contributed $54,000 to its postretirement benefit plan in the first six months of 2011. These contributions consist of insurance premium payments for medical, dental and life insurance benefits made on behalf of the Company’s eligible retired employees.