Middlesex Water Company (Middlesex Water), a US based water and wastewater utility, has reported operating revenues of $91 million for the year-end 2008, compared with the operating revenues of $86.1 million in the previous year-end. It has also reported a net income of $12.2 million, or $0.89 per diluted share, for the year-end 2008, compared with the net income of $11.8 million, or $0.87 per diluted share, in the previous year-end.
Middlesex Water president and chief executive officer Dennis W. Doll said, Despite the deepening uncertainties and volatility in the marketplace, we were able to achieve moderate growth in revenues, customers and earnings per share in 2008. Revenues in our Middlesex system increased as a result of rate relief implemented in late 2007. We realized improved water sales in our Delaware system, Tidewater Utilities, Inc. and our regulated wastewater operations in Delaware contributed to increased revenues due to customer growth. Although we are seeing some impact from our nation’s economic challenges on the business in the form of moderately reduced water consumption for industrial, commercial and residential purposes, we remain focused on maintaining operational integrity and continuing to improve service to customers through investments in infrastructure and technology. Our mature regulatory model, reasonably predictable revenue stream and stable customer base are all elements of stability in an otherwise unstable economic environment, he added.
2008 Operating Results
Consolidated operating revenues rose $4.9 million, or 5.7% over the same period in 2007. Revenues in our Middlesex system increased by $4.2 million as result of a 9.1% base rate increase implemented in October 2007. Middlesex revenues decreased $1.1 million due to lower consumption by our customers during 2008. In Delaware, water sales improved by $0.8 million. The company realized additional revenue of $1.2 million as a result of an additional 12% base rate increase granted to Tidewater in February 2007 and additional Distribution System Improvement Charge increases approved in January and July 2008. Revenues from regulated wastewater operations increased $0.2 million due to customer growth.
Fees charged for initial connection to our DE water system were $0.4 million lower in 2008. This is attributed to a slowing of new residential and commercial development in our Delaware service territories. Fees for managing the City of Perth Amboy water and wastewater systems were $0.5 million higher than the same period in 2007, due mostly to scheduled fixed fee increases inherent in the contract. Revenues from regulated wastewater operations in DE increased $0.2 million due to customer growth.
Total operations and maintenance expenses for the year ended December 31, 2008 increased $2.7 million, or 5.8%, from 2007 largely due to labor and benefits costs, which increased $1.3 million. Water production costs were $0.3 million higher in 2008, over 2007. The cost to operate wastewater facilities in Delaware increased by $0.3 million as a result of an increased number of wastewater treatment facilities in operation in Delaware. Costs for service claims under our water and sewer line maintenance program were $0.1 million higher due in part to a 9.4% increase in the number of subscribers in the program during 2008.
Depreciation expense for 2008 rose by $0.4 million or 5.1% due to a higher level of utility plant in service. Other taxes increased by $0.5 million generally reflecting additional taxes on higher taxable gross revenues, payroll and real estate.
Fourth Quarter 2008
For the three month period ended December 31, 2008, operating revenues increased to $21.5 million, up from $21.2 million, for the same period in 2007. This increase was largely due to rate relief, customer growth and increased water consumption in our Delaware system. Total operating expenses increased to $17.0 million, up from $16.3 million for the same period in 2007.
Net income decreased to $1.9 million, down from $2.6 million, in 2007. The decrease of $0.7 million was primarily due to the sale of certain water service rights in Delaware in 2007, that were not expected to recur in 2008, and increased labor and benefits costs including a reduction in the cash surrender value of life insurance policies due to financial market conditions.