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COMMITMENTS AND CONTINGENCIES | 12 Months Ended
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Dec. 31, 2022
COMMITMENTS AND CONTINGENCIES [Abstract] |
COMMITMENTS AND CONTINGENCIES | NOTE 11 COMMITMENTS AND CONTINGENCIES Leases In the first quarter of 2019, the Company adopted the new standard on leases that was issued by the FASB and has applied this standard as disclosed in Note 3. Easements During 2003, Artesian Water Pennsylvania entered into a 40 year easement agreement to acquire an easement to access, operate, maintain, repair, improve, replace and connect Artesian’s water system to a well, including a parcel of land around the well. Management made certain estimates and assumptions regarding the separation of lease and nonlease components related to this easement agreement. It was determined that the majority of this easement agreement contains non-lease components. Easement payments for 2022, 2021 and 2020 were $43,000, $42,000 and $41,000, respectively. Artesian Wastewater entered into a perpetual agreement for the use of approximately 460 acres of land in Sussex County, Delaware for wastewater disposal. Beginning November 2016, Artesian Wastewater was required to pay a minimum of $40,000 per year for the use of this land. Once operations began in 2021, the monthly fee is based on the volume of wastewater disposed on the properties charged at a rate per one thousand gallons of wastewater, providing for a minimum monthly payment. Payments for 2022, 2021 and 2020 were $113,000, $65,000, $44,000, respectively. The agreement can be terminated by giving 180 day notice prior to the termination date. Future minimum annual payments related to the easement agreements noted above for the years subsequent to 2022 are as follows:
In thousands |  |  |
2023 |  | $ | 60 |
2024 |  |  | 39 |
2025 |  |  | 40 |
2026 |  |  | 41 |
2027 |  |  | 43 |
2028 through 2043 |  |  | 782 |
|  | $ | 1,005 |
Interconnections Artesian Water has two water service interconnection agreements with a neighboring utility, Chester Water Authority. One agreement, that expired on December 31, 2021, had a “take or pay” clause requiring us to purchase 3 million gallons per day. The other agreement is effective from January 1, 2022 through December 31, 2026, includes automatic five year renewal terms, unless terminated by either party, and has a “take or pay” clause which required us to purchase water on a step down schedule through July 5, 2022, and now requires us to purchase a minimum of 0.5 million gallons per day. Rates charged under this agreement are subject to change. Artesian Water Maryland has one interconnection agreement with the Town of North East that has a “take or pay” clause requiring us to purchase a minimum of 35,000 gallons per day. The agreement extends through June 2024. The minimum annual purchase commitments for all interconnection agreements for 2023 through 2027, calculated at the noticed rates, are as follows:
In thousands |  |  |
2023 |  | $ | 809 |
2024 |  |  | 798 |
2025 |  |  | 770 |
2026 |  |  | 770 |
2027 |  |  | — |
|  | $ | 3,147 |
Expenses for purchased water were $1.8 million, $4.3 million and $4.3 million for 2022, 2021 and 2020, respectively. Other Commitments In 2020, Artesian Water entered into a short term agreement with Worldwide Industries Corporation to clean and paint a tank in 2020. Pursuant to the agreement, the expenditure in 2020 was $0.1 million. In April 2021, Artesian Water entered into a 3-year agreement with Worldwide Industries Corporation effective July 1, 2021 to paint elevated water storage tanks. Pursuant to the agreement, the total expenditure for the three years is $1.2 million. In September 2022, this agreement was amended to paint an additional elevated water storage tank and to extend the term of the agreement for an additional year. Pursuant to the amended agreement, the total expenditure for the four years is $2.2 million. Tank painting expense for 2022, 2021 and 2020 was $531,000, $222,000, and $155,000, respectively. Budgeted mandatory utility plant expenditures, due to planned governmental highway projects, which require the relocation of Artesian Water’s water service mains, expected to be incurred in 2023 through 2025 are as follows:
In thousands |  |  |
2023 |  | $ | 2,218 |
2024 |  |  | 8,780 |
2025 |  |  | 5,170 |
|  | $ | 16,168 |
The exact timing and extent of these relocation projects is controlled primarily by the Delaware Department of Transportation.

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