ý
|
Annual Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended
December 31, 2017
or
|
o
|
Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period to from
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Connecticut
(State or other jurisdiction of
incorporation or organization)
|
06-0739839
(I.R.S. Employer Identification No.)
|
|
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93 West Main Street, Clinton, CT
(Address of principal executive office)
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06413
(Zip Code)
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Title of each Class
Common Stock, without par value
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Name of each exchange on which registered
The Nasdaq Stock Market, LLC
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Large Accelerated Filer
o
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Accelerated Filer
x
|
Non-Accelerated Filer
o
|
Smaller reporting company
o
Emerging growth company
o
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Document
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Part of Form 10-K Into Which Document is Incorporated
|
|
|
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Definitive Proxy Statement, to be filed on or about April 6, 2018, for Annual Meeting of Shareholders to be held on May 10, 2018.
|
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Part III
|
•
|
projected capital expenditures and related funding requirements;
|
•
|
the availability and cost of capital;
|
•
|
developments, trends and consolidation in the water and wastewater utility industries;
|
•
|
dividend payment projections;
|
•
|
our ability to successfully acquire and integrate regulated water and wastewater systems, as well as unregulated businesses, that are complementary to our operations and the growth of our business;
|
•
|
the capacity of our water supplies, water facilities and wastewater facilities;
|
•
|
the impact of limited geographic diversity on our exposure to unusual weather;
|
•
|
the impact of conservation awareness of customers and more efficient plumbing fixtures and appliances on water usage per customer;
|
•
|
our capability to pursue timely rate increase requests;
|
•
|
our authority to carry on our business without unduly burdensome restrictions;
|
•
|
our ability to maintain our operating costs at the lowest possible level, while providing good quality water service;
|
•
|
our ability to obtain fair market value for condemned assets;
|
•
|
the impact of fines and penalties;
|
•
|
changes in laws, governmental regulations and policies, including environmental, health and water quality and public utility regulations and policies;
|
•
|
the decisions of governmental and regulatory bodies, including decisions to raise or lower rates;
|
•
|
our ability to successfully extend and expand our service contract work within our Service and Rentals Segment in both Connecticut and Maine;
|
•
|
the development of new services and technologies by us or our competitors;
|
•
|
the availability of qualified personnel;
|
•
|
the condition of our assets;
|
•
|
the impact of legal proceedings;
|
•
|
general economic conditions;
|
•
|
the profitability of our Real Estate Segment, which is subject to the amount of land we have available for sale and/or donation, the demand for any available land, the continuation of the current state tax benefits relating to the donation of land for open space purposes and regulatory approval for land dispositions;
|
•
|
the amount of repair tax deductions and the Internal Revenue Service’s ultimate acceptance of the deduction methodology; and
|
•
|
acquisition-related costs and synergies.
|
•
|
the risks associated with the proposed merger between the Company and SJW Group and the anticipated timing of the merger;
|
•
|
changes in public utility regulations and policies;
|
•
|
changes in general economic, business, credit and financial market conditions;
|
•
|
changes in environmental conditions, including those that result in water use restrictions;
|
•
|
the determination of what qualifies for a repair expense tax deduction;
|
•
|
abnormal weather conditions;
|
•
|
increases in energy and fuel costs;
|
•
|
unfavorable changes to the federal and/or state tax codes;
|
•
|
significant changes in, or unanticipated, capital requirements;
|
•
|
significant changes in our credit rating or the market price of our common stock;
|
•
|
our ability to integrate businesses, technologies or services which we may acquire;
|
•
|
our ability to manage the expansion of our business;
|
•
|
the continuous and reliable operation of our information technology systems, including the impact of cyber security attacks or other cyber-related events;
|
•
|
the extent to which we are able to develop and market new and improved services;
|
•
|
the continued demand by telecommunication companies for antenna site leases on our property;
|
•
|
the effect of the loss of major customers;
|
•
|
our ability to retain the services of key personnel and to hire qualified personnel as we expand;
|
•
|
labor disputes;
|
•
|
increasing difficulties in obtaining insurance and increased cost of insurance;
|
•
|
cost overruns relating to improvements or the expansion of our operations;
|
•
|
increases in the costs of goods and services;
|
•
|
civil disturbance or terroristic threats or acts; and
|
•
|
changes in accounting pronouncements.
|
•
|
Board of Directors Code of Conduct
|
•
|
Compensation Committee Charter
|
•
|
Corporate Finance and Investments Committee Charter
|
•
|
Corporate Governance Committee Charter
|
•
|
Bylaws of Connecticut Water Service, Inc.
|
•
|
Employee Code of Conduct
|
•
|
Audit Committee Charter
|
1.
|
Upon implementation of new rates under the Agreement, until such time as new rates are adopted in a general rate case, through a temporary modification of the earnings sharing mechanism, Connecticut Water customers will receive one hundred percent of any earnings in excess of levels allowed by law rather than limiting such customer credits to 50% as contemplated by applicable law;
|
2.
|
Connecticut Water agrees it will not file for a general increase of Connecticut Water’s base rates to be effective before January 1, 2020;
|
3.
|
The pending proceeding initiated by PURA in Docket No. 09-12-11RE03, Application of The Connecticut Water Company for Amended Rates – Federal Tax Cuts and Jobs Act shall be closed; and
|
4.
|
Connecticut Water shall continue to make investments in infrastructure replacement consistent with its approved WICA plan. Connecticut Water shall be allowed to continue to pursue recovery of eligible projects through WICA.
|
|
2017
|
|
2016
|
|
2015
|
||||||
Customers:
|
|
|
|
|
|
||||||
Residential
|
118,493
|
|
|
111,494
|
|
|
110,254
|
|
|||
Commercial
|
9,386
|
|
|
8,626
|
|
|
8,569
|
|
|||
Industrial
|
536
|
|
|
479
|
|
|
478
|
|
|||
Public Authority
|
1,072
|
|
|
948
|
|
|
964
|
|
|||
Fire Protection
|
3,178
|
|
|
2,876
|
|
|
2,815
|
|
|||
Other (including non-metered accounts)
|
2,980
|
|
|
545
|
|
|
553
|
|
|||
Total
|
135,645
|
|
|
124,968
|
|
|
123,633
|
|
|||
Water Revenues
(in thousands):
|
|
|
|
|
|
|
|
|
|||
Residential
|
$
|
62,831
|
|
|
$
|
59,884
|
|
|
$
|
58,439
|
|
Commercial
|
13,676
|
|
|
12,250
|
|
|
11,816
|
|
|||
Industrial
|
3,196
|
|
|
3,176
|
|
|
3,229
|
|
|||
Public Authority
|
3,845
|
|
|
3,510
|
|
|
3,193
|
|
|||
Fire Protection
|
20,235
|
|
|
18,486
|
|
|
18,016
|
|
|||
Other (including non-metered accounts)
|
3,271
|
|
|
1,361
|
|
|
1,348
|
|
|||
Total
|
$
|
107,054
|
|
|
$
|
98,667
|
|
|
$
|
96,041
|
|
Customer Water Consumption
(millions of gallons):
|
|
|
|
|
|
|
|
|
|||
Residential
|
6,408
|
|
|
6,583
|
|
|
6,551
|
|
|||
Commercial
|
2,026
|
|
|
1,954
|
|
|
1,941
|
|
|||
Industrial
|
711
|
|
|
724
|
|
|
777
|
|
|||
Public Authority
|
575
|
|
|
539
|
|
|
503
|
|
|||
Total
|
9,720
|
|
|
9,800
|
|
|
9,772
|
|
Name
|
|
Age in 2018*
|
|
Offices
|
|
Period Held or Prior Position
|
|
Term of Office Expires
|
D. C. Benoit
|
|
61
|
|
President and Chief Executive Officer
|
|
Held current position or other executive position with the Company since April 1996
|
|
2018 Annual Meeting
|
R. J. Doffek
|
|
55
|
|
Chief Financial Officer, Treasurer and Controller
|
|
Held current position or other finance position with the Company since November 2015
|
|
2018 Annual Meeting
|
C. J. Patla
|
|
50
|
|
Vice President – Service Delivery
|
|
Held current position or other engineering position with the Company since June 1990
|
|
2018 Annual Meeting
|
M. P. Westbrook
|
|
59
|
|
Vice President – Customer and Regulatory Affairs
|
|
Held current position or other management position with the Company since September 1988
|
|
2018 Annual Meeting
|
K. A. Johnson
|
|
51
|
|
Vice President – Human Resources and Corporate Secretary
|
|
Held current position or other human resources position with the Company since May 2007
|
|
2018 Annual Meeting
|
R. L. Knowlton
|
|
59
|
|
Division President – The Maine Water Company
|
|
Vice President of Operations of The Maine Water Company (and its predecessor companies) since 1993
|
|
2018 Annual Meeting
|
•
|
power loss, computer systems failures, and internet, telecommunications or data network failures;
|
•
|
operator negligence or improper operation by, or supervision of, employees;
|
•
|
physical and electronic loss of data;
|
•
|
computer viruses, cyber security attacks, intentional security breaches, hacking, denial of service actions, misappropriation of data and similar events;
|
•
|
difficulties in the implementation of upgrades or modification to our information technology systems; and
|
•
|
hurricanes, fires, floods, earthquakes and other natural disasters.
|
•
|
Cyber security architecture;
|
•
|
Disaster recovery automation;
|
•
|
Web security;
|
•
|
Systems controls;
|
•
|
Program awareness;
|
•
|
Cyber training for employees;
|
•
|
Phishing campaigns;
|
•
|
Systems patch management; and
|
•
|
Supporting cyber policy for all projects or ongoing practices.
|
•
|
dilutive issuances of our equity securities;
|
•
|
incurrence of debt and contingent liabilities;
|
•
|
failure to have effective internal control over financial reporting;
|
•
|
fluctuations in quarterly results; and
|
•
|
other acquisition-related expenses.
|
•
|
the number of years to depreciate certain assets;
|
•
|
amounts to set aside for uncollectible accounts receivable and uninsured losses;
|
•
|
our legal exposure and the appropriate accrual for claims, including medical and workers’ compensation claims;
|
•
|
future costs for pensions and other post-retirement benefit obligations; and
|
•
|
possible tax allowances.
|
|
Price
|
|
Dividends
|
||||||||
Period
|
High
|
|
Low
|
|
Paid
|
||||||
2017
|
|
|
|
|
|
||||||
First Quarter
|
$
|
59.26
|
|
|
$
|
51.87
|
|
|
$
|
0.2825
|
|
Second Quarter
|
62.15
|
|
|
50.75
|
|
|
0.2975
|
|
|||
Third Quarter
|
59.65
|
|
|
53.24
|
|
|
0.2975
|
|
|||
Fourth Quarter
|
65.04
|
|
|
57.02
|
|
|
0.2975
|
|
|||
2016
|
|
|
|
|
|
||||||
First Quarter
|
$
|
45.66
|
|
|
$
|
37.48
|
|
|
$
|
0.2675
|
|
Second Quarter
|
56.27
|
|
|
43.16
|
|
|
0.2825
|
|
|||
Third Quarter
|
56.62
|
|
|
45.13
|
|
|
0.2825
|
|
|||
Fourth Quarter
|
58.32
|
|
|
48.00
|
|
|
0.2825
|
|
SELECTED FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
||||||||||
Years Ended December 31, (thousands of dollars except per share amounts and where otherwise indicated)
|
|
|
|
|
|
|
|
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Revenues
|
$
|
107,054
|
|
|
$
|
98,667
|
|
|
$
|
96,041
|
|
|
$
|
94,020
|
|
|
$
|
91,481
|
|
Operating Expenses
|
$
|
73,649
|
|
|
$
|
70,462
|
|
|
$
|
69,399
|
|
|
$
|
68,856
|
|
|
$
|
69,488
|
|
Other Utility Income, Net of Taxes
|
$
|
824
|
|
|
$
|
744
|
|
|
$
|
797
|
|
|
$
|
833
|
|
|
$
|
856
|
|
Total Utility Operating Income
|
$
|
34,229
|
|
|
$
|
28,949
|
|
|
$
|
27,439
|
|
|
$
|
25,997
|
|
|
$
|
22,849
|
|
Interest and Debt Expense
|
$
|
8,841
|
|
|
$
|
6,916
|
|
|
$
|
6,737
|
|
|
$
|
6,515
|
|
|
$
|
6,130
|
|
Net Income
|
$
|
25,054
|
|
|
$
|
23,387
|
|
|
$
|
22,761
|
|
|
$
|
21,319
|
|
|
$
|
18,269
|
|
Cash Common Stock Dividends Paid
|
$
|
13,882
|
|
|
$
|
12,514
|
|
|
$
|
11,715
|
|
|
$
|
11,188
|
|
|
$
|
10,758
|
|
Dividend Payout Ratio
|
55
|
%
|
|
54
|
%
|
|
51
|
%
|
|
52
|
%
|
|
59
|
%
|
|||||
Weighted Average Common Shares Outstanding
|
11,539,520
|
|
|
11,008,565
|
|
|
10,958,499
|
|
|
10,892,986
|
|
|
10,827,220
|
|
|||||
Basic Earnings Per Common Share from Continuing Operations
|
$
|
2.17
|
|
|
$
|
2.12
|
|
|
$
|
2.07
|
|
|
$
|
1.95
|
|
|
$
|
1.68
|
|
Number of Shares Outstanding at Year End
|
12,065,016
|
|
|
11,248,458
|
|
|
11,192,882
|
|
|
11,124,630
|
|
|
11,038,232
|
|
|||||
ROE on Year End Common Equity
|
8.5
|
%
|
|
9.9
|
%
|
|
10.2
|
%
|
|
10.2
|
%
|
|
9.2
|
%
|
|||||
Declared Common Dividends Per Share
|
$
|
1.175
|
|
|
$
|
1.115
|
|
|
$
|
1.05
|
|
|
$
|
1.01
|
|
|
$
|
0.98
|
|
CONSOLIDATED BALANCE SHEET
|
|
|
|
|
|
|
|
|
|
||||||||||
Common Stockholders’ Equity
|
$
|
293,630
|
|
|
$
|
236,028
|
|
|
$
|
223,977
|
|
|
$
|
209,451
|
|
|
$
|
197,753
|
|
Long-Term Debt (Consolidated, Excluding Current Maturities)
|
253,367
|
|
|
197,047
|
|
|
171,868
|
|
|
170,309
|
|
|
168,201
|
|
|||||
Preferred Stock
|
772
|
|
|
772
|
|
|
772
|
|
|
772
|
|
|
772
|
|
|||||
Total Capitalization
|
$
|
547,769
|
|
|
$
|
433,847
|
|
|
$
|
396,617
|
|
|
$
|
380,532
|
|
|
$
|
366,726
|
|
Stockholders’ Equity (Includes Preferred Stock)
|
54
|
%
|
|
55
|
%
|
|
57
|
%
|
|
55
|
%
|
|
54
|
%
|
|||||
Long-Term Debt
|
46
|
%
|
|
45
|
%
|
|
43
|
%
|
|
45
|
%
|
|
46
|
%
|
|||||
Net Utility Plant
|
$
|
697,723
|
|
|
$
|
601,396
|
|
|
$
|
546,284
|
|
|
$
|
506,939
|
|
|
$
|
471,876
|
|
Total Assets
|
$
|
898,783
|
|
|
$
|
784,502
|
|
|
$
|
710,715
|
|
|
$
|
664,897
|
|
|
$
|
623,970
|
|
Book Value - Per Common Share
|
$
|
24.34
|
|
|
$
|
20.98
|
|
|
$
|
20.01
|
|
|
$
|
18.83
|
|
|
$
|
17.91
|
|
OPERATING REVENUES BY REVENUE CLASS
|
|
|
|
|
|
|
|
|
|||||||||||
Residential
|
$
|
62,831
|
|
|
$
|
59,884
|
|
|
$
|
58,439
|
|
|
$
|
57,095
|
|
|
$
|
55,403
|
|
Commercial
|
13,676
|
|
|
12,250
|
|
|
11,816
|
|
|
11,473
|
|
|
11,238
|
|
|||||
Industrial
|
3,196
|
|
|
3,176
|
|
|
3,229
|
|
|
2,984
|
|
|
3,120
|
|
|||||
Public Authority
|
3,845
|
|
|
3,510
|
|
|
3,193
|
|
|
3,215
|
|
|
2,967
|
|
|||||
Fire Protection
|
20,235
|
|
|
18,486
|
|
|
18,016
|
|
|
17,757
|
|
|
17,337
|
|
|||||
Other (Including Non-Metered Accounts)
|
3,271
|
|
|
1,361
|
|
|
1,348
|
|
|
1,496
|
|
|
1,416
|
|
|||||
Total Operating Revenues
|
$
|
107,054
|
|
|
$
|
98,667
|
|
|
$
|
96,041
|
|
|
$
|
94,020
|
|
|
$
|
91,481
|
|
Number of Customers (End of Year)
|
135,645
|
|
|
124,968
|
|
|
123,633
|
|
|
123,071
|
|
|
121,768
|
|
|||||
Billed Consumption (Millions of Gallons)
|
9,720
|
|
|
9,800
|
|
|
9,772
|
|
|
9,428
|
|
|
9,277
|
|
|||||
Number of Employees
|
294
|
|
|
266
|
|
|
266
|
|
|
265
|
|
|
259
|
|
1.
|
Upon implementation of new rates under the Agreement, until such time as new rates are adopted in a general rate case, through a temporary modification of the earnings sharing mechanism, Connecticut Water customers will receive one hundred percent of any earnings in excess of levels allowed by law rather than limiting such customer credits to 50% as contemplated by applicable law;
|
2.
|
Connecticut Water agrees it will not file for a general increase of Connecticut Water’s base rates to be effective before January 1, 2020;
|
3.
|
The pending proceeding initiated by PURA in Docket No. 09-12-11RE03, Application of The Connecticut Water Company for Amended Rates – Federal Tax Cuts and Jobs Act shall be closed; and
|
4.
|
Connecticut Water shall continue to make investments in infrastructure replacement consistent with its approved WICA plan. Connecticut Water shall be allowed to continue to pursue recovery of eligible projects through WICA.
|
•
|
Cyber security architecture;
|
•
|
Disaster recovery automation;
|
•
|
Web security;
|
•
|
Systems controls;
|
•
|
Program awareness;
|
•
|
Cyber training for employees;
|
•
|
Phishing campaigns;
|
•
|
Systems patch management; and
|
•
|
Supporting cyber policy for all projects or ongoing practices.
|
|
Increase (Decrease) in Pension Expense
|
|
Increase (Decrease) in Post-retirement Expense
|
||||
1% Increase in the discount rate
|
$
|
(1,462,000
|
)
|
|
$
|
(177,000
|
)
|
1% Decrease in the discount rate
|
$
|
1,762,000
|
|
|
$
|
208,000
|
|
|
Gross Construction Expenditures
|
|
Construction Funded by Developers & Others
|
|
Construction Funded by Company
|
||||||
2017
|
$
|
53,796,000
|
|
|
$
|
2,253,000
|
|
|
$
|
51,543,000
|
|
2016
|
$
|
67,887,000
|
|
|
$
|
1,548,000
|
|
|
$
|
66,339,000
|
|
2015
|
$
|
48,555,000
|
|
|
$
|
781,000
|
|
|
$
|
47,774,000
|
|
2018 (Projected)
|
$
|
66,200,000
|
|
|
**
|
|
|
$
|
66,200,000
|
|
Payments due by Periods
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less
than 1
year
|
|
Years
2 and 3
|
|
Years
4 and 5
|
|
More
than 5
years
|
||||||||||
Long-Term Debt (LTD)
|
|
$
|
263,626
|
|
|
$
|
6,173
|
|
|
$
|
16,140
|
|
|
$
|
45,352
|
|
|
$
|
195,961
|
|
Interest on LTD
|
|
124,240
|
|
|
10,325
|
|
|
19,853
|
|
|
18,862
|
|
|
75,200
|
|
|||||
Operating Lease Obligations
|
|
155
|
|
|
113
|
|
|
36
|
|
|
4
|
|
|
2
|
|
|||||
Purchase Obligations (1) (2) (3) (4)
|
|
83,672
|
|
|
1,524
|
|
|
3,096
|
|
|
3,000
|
|
|
76,052
|
|
|||||
Long-Term Compensation Agreements (5)
|
|
52,542
|
|
|
4,428
|
|
|
7,767
|
|
|
7,765
|
|
|
32,582
|
|
|||||
Total (6) (7)
|
|
$
|
524,235
|
|
|
$
|
22,563
|
|
|
$
|
46,892
|
|
|
$
|
74,983
|
|
|
$
|
379,797
|
|
1.
|
Connecticut Water has an agreement with the South Central Connecticut Regional Water Authority (“RWA”) to purchase water from RWA. The agreement was signed in April 2006 and became effective upon the receipt of all regulatory approvals in 2008 and will remain in effect for a minimum of fifty years upon becoming effective. Connecticut Water will pay RWA $75,000 per year as part of a capacity agreement, for a total of 14 years, starting on the effective date of the agreement. In addition, Connecticut Water is able, but under no obligation, to purchase up to one million gallons of water per day at the then current wholesale rates per the agreement.
|
2.
|
Connecticut Water has an agreement with The Metropolitan District (“MDC”) to purchase water from MDC to serve the Unionville system. The agreement became effective on October 6, 2000 and has a term of fifty years beginning May 19, 2003, the date the water supply facilities related to the agreement were placed in service. Connecticut Water agrees to purchase 283 million gallons of water annually from MDC.
|
3.
|
Connecticut Water has a 99 year lease with 19 Perry Street to obtain well water for its public water supply system. The agreement became effective in 1975 and is based on current water rates in effect each year. There is no limitation on the amount of water that can be withdrawn from the leased property.
|
4.
|
Maine Water has an agreement with the Kenebec Water District for potable water service. The agreement was extended and became effective on November 7, 2015 for a new term of 5 years. Maine Water guarantees a minimum consumption of 63.5 million gallons of water annually. Water sales to Maine Water are billed at a flat rate per gallon plus the monthly minimum tariff rate for a 4-inch metered service.
|
5.
|
Pension and post retirement contributions cannot be reasonably estimated beyond
2018
and may be impacted by such factors as return on pension assets, changes in the number of plan participants and future salary increases.
|
6.
|
We pay refunds on Advances for Construction over a specific period of time based on operating revenues related to developer-installed water mains or as new customers are connected to and take service from such mains. After all refunds are paid, any remaining balance is transferred to Contributions in Aid of Construction. The refund amounts are not included in the above table because the refund amounts and timing are dependent upon several variables, including new customer connections, customer consumption levels and future rate increases, which cannot be accurately estimated. Portions of these refund amounts are payable annually through 2027 and amounts not paid by the contract expiration dates become non-refundable.
|
7.
|
We intend to fund these contractual obligations with cash flows from operations and liquidity sources held by or available to us.
|
Business Segment
|
|
2017 Net Income
|
|
2016 Net Income
|
|
Increase (Decrease)
|
||||||
Water Operations
|
|
$
|
23,854
|
|
|
$
|
22,222
|
|
|
$
|
1,632
|
|
Real Estate
|
|
33
|
|
|
(54
|
)
|
|
87
|
|
|||
Services and Rentals
|
|
1,167
|
|
|
1,219
|
|
|
(52
|
)
|
|||
Total
|
|
$
|
25,054
|
|
|
$
|
23,387
|
|
|
$
|
1,667
|
|
|
2017
|
|
2016
|
|
Increase (Decrease)
|
||||||
Operating Revenues
|
$
|
107,054
|
|
|
$
|
98,667
|
|
|
$
|
8,387
|
|
Operation and Maintenance
|
48,017
|
|
|
44,191
|
|
|
3,826
|
|
|||
Depreciation
|
16,684
|
|
|
13,905
|
|
|
2,779
|
|
|||
Income Taxes
|
(1,993
|
)
|
|
2,570
|
|
|
(4,563
|
)
|
|||
Taxes Other than Income Taxes
|
10,941
|
|
|
9,796
|
|
|
1,145
|
|
|||
Other Utility Income
|
824
|
|
|
744
|
|
|
80
|
|
|||
Other (Deductions) Income
|
(2,308
|
)
|
|
(1,009
|
)
|
|
(1,299
|
)
|
|||
Interest and Debt Expense (net of AFUDC)
|
8,067
|
|
|
5,718
|
|
|
2,349
|
|
|||
Total Net Income from Water Operations
|
$
|
23,854
|
|
|
$
|
22,222
|
|
|
$
|
1,632
|
|
Expense Components
|
|
2017
|
|
2016
|
|
Increase / (Decrease)
|
|
HVWC and Avon Water O&M
|
|
Adjusted Increase/(Decrease)
|
||||||||||
Mark-to-market
|
|
$
|
13
|
|
|
$
|
(1,401
|
)
|
|
$
|
1,414
|
|
|
$
|
—
|
|
|
$
|
1,414
|
|
Outside services
|
|
3,793
|
|
|
3,284
|
|
|
509
|
|
|
127
|
|
|
382
|
|
|||||
Maintenance
|
|
3,976
|
|
|
3,312
|
|
|
664
|
|
|
389
|
|
|
275
|
|
|||||
Payroll
|
|
16,941
|
|
|
15,812
|
|
|
1,129
|
|
|
948
|
|
|
181
|
|
|||||
Subscriptions and dues
|
|
393
|
|
|
247
|
|
|
146
|
|
|
3
|
|
|
143
|
|
|||||
Property and liability insurance
|
|
1,661
|
|
|
1,542
|
|
|
119
|
|
|
68
|
|
|
51
|
|
|||||
Investor relations
|
|
809
|
|
|
775
|
|
|
34
|
|
|
—
|
|
|
34
|
|
|||||
Medical
|
|
2,629
|
|
|
2,597
|
|
|
32
|
|
|
39
|
|
|
(7
|
)
|
|||||
Utility costs
|
|
4,354
|
|
|
3,899
|
|
|
455
|
|
|
489
|
|
|
(34
|
)
|
|||||
Vehicles
|
|
1,748
|
|
|
1,793
|
|
|
(45
|
)
|
|
34
|
|
|
(79
|
)
|
|||||
Purchased water
|
|
1,559
|
|
|
1,675
|
|
|
(116
|
)
|
|
35
|
|
|
(151
|
)
|
|||||
Pension
|
|
2,925
|
|
|
3,096
|
|
|
(171
|
)
|
|
2
|
|
|
(173
|
)
|
|||||
Customer
|
|
1,734
|
|
|
1,829
|
|
|
(95
|
)
|
|
96
|
|
|
(191
|
)
|
|||||
Water treatment (including chemicals)
|
|
2,695
|
|
|
2,702
|
|
|
(7
|
)
|
|
201
|
|
|
(208
|
)
|
|||||
Other benefits
|
|
1,123
|
|
|
1,947
|
|
|
(824
|
)
|
|
79
|
|
|
(903
|
)
|
|||||
Other
|
|
1,664
|
|
|
1,082
|
|
|
582
|
|
|
201
|
|
|
381
|
|
|||||
Total
|
|
$
|
48,017
|
|
|
$
|
44,191
|
|
|
$
|
3,826
|
|
|
$
|
2,711
|
|
|
$
|
1,115
|
|
•
|
The increase in mark-to-market expense was related to an out-of-period adjustment made during the second quarter of 2016 related to stock-based performance awards previously granted to officers of the Company. The Company had mistakenly marked certain stock-based performance awards classified as equity awards to the market price of the Company’s common stock price at the end of each reporting period. During the second quarter of 2016, the Company reversed all of the incorrectly recorded mark-to-market expense resulting in a one-time benefit of $2.6 million, including a reversal of approximately $1.0 million in expense related to the first quarter of 2016 for a net out-of-period adjustment of $1.6 million;
|
•
|
The increase in Outside services was primarily due to higher auditing fees, higher outside labor costs and an increase in the use of consultants during the year ended December 31, 2017 when compared to the year ending December 31, 2016. These increases were partially offset by a decrease in legal fees during 2017;
|
•
|
Payroll costs increased primarily due higher wages in the year ended December 31, 2017 compared to 2016;
|
•
|
Subscriptions and dues increased primarily due to a new training module in use by the Company in 2017 that was not fully in use in 2016; and
|
•
|
Property and liability insurance costs increased in 2017 over 2016 due to higher premiums on the Company’s insurance coverage stemming from growth of insurable assets.
|
•
|
The decrease in the Other benefits was primarily due to the resignation of the Company’s former Chief Executive Officer. As a result of his departure, the executive forfeited previously awarded performance stock awards that had not vested and, in the third quarter of 2017, the Company reversed the expense recognized in previous periods associated with those unvested awards;
|
•
|
Water treatment costs decreased due to a decrease in the cost of chemicals used in the treatment process;
|
•
|
Customer costs decreased due to a reduction in costs associated with a voluntary water conservation program that rewards customers for reducing their consumption by 10% that was in effect during 2016, lower uncollectible accounts charges, reduced costs associated with customer communications, and a decrease in outside collection efforts during the year ended December 31, 2017;
|
•
|
Pension costs decreased primarily due to the plan’s 2016 asset returns which were higher than expected and the Company’s $5.5 million contribution to the pension plan in the first half of 2016. The higher asset value led to a higher expected return component in the 2017 expense as well as a lower recognized gain/loss component. This decrease was partially offset by a decrease in the discount rate used in determining 2017 expense compared to the discount rate used to determine the 2016 expense; and
|
•
|
Purchased water decreased in 2017 primarily due to the end of drought like conditions that persisted through much of 2016, causing the Company to purchase water from neighboring utilities to meet customer demand. As the drought conditions improved during 2017, the need to purchase water lessened.
|
Business Segment
|
|
2016 Net Income
|
|
2015 Net Income
|
|
Increase (Decrease)
|
||||||
Water Operations
|
|
$
|
22,222
|
|
|
$
|
21,018
|
|
|
$
|
1,204
|
|
Real Estate
|
|
(54
|
)
|
|
349
|
|
|
(403
|
)
|
|||
Services and Rentals
|
|
1,219
|
|
|
1,394
|
|
|
(175
|
)
|
|||
Total
|
|
$
|
23,387
|
|
|
$
|
22,761
|
|
|
$
|
626
|
|
|
2016
|
|
2015
|
|
Increase (Decrease)
|
||||||
Operating Revenues
|
$
|
98,667
|
|
|
$
|
96,041
|
|
|
$
|
2,626
|
|
Operation and Maintenance
|
44,191
|
|
|
48,052
|
|
|
(3,861
|
)
|
|||
Depreciation
|
13,905
|
|
|
12,871
|
|
|
1,034
|
|
|||
Income Taxes
|
2,570
|
|
|
(818
|
)
|
|
3,388
|
|
|||
Taxes Other than Income Taxes
|
9,796
|
|
|
9,294
|
|
|
502
|
|
|||
Other Utility Income
|
744
|
|
|
797
|
|
|
(53
|
)
|
|||
Other (Deductions) Income
|
(1,009
|
)
|
|
(214
|
)
|
|
(795
|
)
|
|||
Interest and Debt Expense (net of AFUDC)
|
5,718
|
|
|
6,207
|
|
|
(489
|
)
|
|||
Total Net Income from Water Operations
|
$
|
22,222
|
|
|
$
|
21,018
|
|
|
$
|
1,204
|
|
Expense Components
|
|
2016
|
|
2015
|
|
Increase (Decrease)
|
||||||
Mark-to-market
|
|
$
|
(1,401
|
)
|
|
$
|
265
|
|
|
$
|
(1,666
|
)
|
Pension
|
|
3,096
|
|
|
4,392
|
|
|
(1,296
|
)
|
|||
Outside services
|
|
3,284
|
|
|
4,224
|
|
|
(940
|
)
|
|||
Payroll
|
|
15,812
|
|
|
16,110
|
|
|
(298
|
)
|
|||
Post-retirement medical
|
|
440
|
|
|
729
|
|
|
(289
|
)
|
|||
Maintenance
|
|
3,312
|
|
|
3,567
|
|
|
(255
|
)
|
|||
Utility costs
|
|
3,899
|
|
|
4,126
|
|
|
(227
|
)
|
|||
Water treatment (including chemicals)
|
|
2,702
|
|
|
2,740
|
|
|
(38
|
)
|
|||
Property and liability insurance
|
|
1,542
|
|
|
1,530
|
|
|
12
|
|
|||
Vehicles
|
|
1,793
|
|
|
1,666
|
|
|
127
|
|
|||
Purchased water
|
|
1,675
|
|
|
1,423
|
|
|
252
|
|
|||
Customer
|
|
1,829
|
|
|
1,494
|
|
|
335
|
|
|||
Medical
|
|
2,597
|
|
|
2,126
|
|
|
471
|
|
|||
Other benefits
|
|
1,945
|
|
|
1,211
|
|
|
734
|
|
|||
Other
|
|
1,666
|
|
|
2,449
|
|
|
(783
|
)
|
|||
Total
|
|
$
|
44,191
|
|
|
$
|
48,052
|
|
|
$
|
(3,861
|
)
|
•
|
The decrease in mark-to-market expense was related to an out-of-period adjustment made during the second quarter of 2016 related to stock-based performance awards previously granted to officers of the Company. The Company had mistakenly marked certain stock-based performance awards classified as equity awards to the market price of the Company’s common stock price at the end of each reporting period. During the second quarter of 2016, the Company reversed all of the incorrectly recorded mark-to-market expense resulting in a one-time benefit of $2.6 million, including a reversal of approximately $1.0 million in expense related to the first quarter of 2016 for a net out-of-period adjustment of $1.6 million;
|
•
|
Pension and post-retirement medical costs decreased primarily due to an increase in the discount rate used in determining 2016 expense compared to the discount rate used to determine the 2015 expense;
|
•
|
Outside services expenses decreased in 2016 primarily due to a reduction in costs associated with contractors and consultants. During 2015, the Company was involved in initiatives surrounding succession planning and risk management that were heavily reliant on consultants to assist with assessments prior to the Company implementing the assessments with internal labor;
|
•
|
Payroll costs decreased in 2016 when compared to 2015 primarily due to the amount of employee time charged to capital projects increasing in 2016 when compared to 2015; and
|
•
|
Utility costs decreased primarily due to decreased primarily due to a reduction in telephone related expenses, as well as a decrease in heating and electric costs.
|
•
|
Other benefits increased in 2016 when compared to 2015 primarily due to increased costs associated with a non-officer incentive plan and the Company’s performance stock plan offered to officers;
|
•
|
Medical costs in 2016 were higher than 2015 primarily due to an increase in medical claims made by employees and their families;
|
•
|
Customer related expenses increased from 2015 levels due to an increase in uncollectible accounts during 2016 and costs associated with a Company sponsored conservation drive that rewarded customers that were able to reduce their annual consumption by 10%; and
|
•
|
Purchased water costs increased primarily due to an increase in the amount of water purchased from neighboring utilities, particularly in the Company’s Shoreline Region in Connecticut which has experienced continuing drought conditions throughout 2016.
|
(in thousands)
|
|
|
||
2018
|
|
$
|
1,524
|
|
2019
|
|
$
|
1,567
|
|
2020
|
|
$
|
1,528
|
|
2021
|
|
$
|
1,476
|
|
2022
|
|
$
|
1,524
|
|
(a)
|
|
1
|
|
|
Financial Statements:
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
Index to Consolidated Financial Statements and Schedule
|
|
46
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
47
|
|
|
|
|
|
Consolidated Statements of Income for the years ended December 31, 2017, 2016 and 2015
|
|
49
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015
|
|
49
|
|
|
|
|
|
Consolidated Balance Sheets at December 31, 2017 and 2016
|
|
50
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015
|
|
51
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
52
|
|
|
2
|
|
|
Financial Statement Schedule:
|
|
|
|
|
|
|
|
The following schedule of the Company is included on the attached page as indicated
|
||
|
|
|
|
|
Schedule II Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2017, 2016 and 2015
|
|
95
|
|
|
|
|
|
All other schedules provided for in the applicable regulations of the Securities and Exchange Commission have been omitted because of the absence of conditions under which they are required or because the required information is set forth in the financial statements or notes thereto.
|
|
|
(b)
|
|
|
|
|
Exhibits
|
|
|
|
|
|
|
|
Exhibits for Connecticut Water Service Inc., are in the Index to Exhibits
|
|
89
|
|
|
|
|
|
Exhibits heretofore filed with the Securities and Exchange Commission as indicated below are incorporated herein by reference and made a part hereof as if filed herewith. Exhibits marked by asterisk (* or **) are being filed or furnished herewith.
|
|
|
|
|
Page
|
|
Index to Consolidated Financial Statements and Schedule
|
|
44
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
47
|
|
|
|
|
|
Consolidated Statements of Income for the years ended December 31, 2017, 2016 and 2015
|
|
49
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015
|
|
49
|
|
|
|
|
|
Consolidated Balance Sheets at December 31, 2017 and 2016
|
|
50
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015
|
|
51
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
52
|
|
|
|
|
|
Schedule II Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2017, 2016 and 2015
|
|
95
|
|
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
||||||
For the Years Ended December 31, (in thousands, except per share data)
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
Operating Revenues
|
|
$
|
107,054
|
|
|
$
|
98,667
|
|
|
$
|
96,041
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|||
Operation and Maintenance
|
|
48,017
|
|
|
44,191
|
|
|
48,052
|
|
|||
Depreciation
|
|
16,684
|
|
|
13,905
|
|
|
12,871
|
|
|||
Income Taxes
|
|
(1,993
|
)
|
|
2,570
|
|
|
(818
|
)
|
|||
Taxes Other Than Income Taxes
|
|
10,941
|
|
|
9,796
|
|
|
9,294
|
|
|||
Total Operating Expenses
|
|
73,649
|
|
|
70,462
|
|
|
69,399
|
|
|||
Net Operating Revenues
|
|
33,405
|
|
|
28,205
|
|
|
26,642
|
|
|||
Other Utility Income, Net of Taxes
|
|
824
|
|
|
744
|
|
|
797
|
|
|||
Total Utility Operating Income
|
|
34,229
|
|
|
28,949
|
|
|
27,439
|
|
|||
Other Income (Deductions), Net of Taxes
|
|
|
|
|
|
|
|
|
|
|||
(Loss) Gain on Real Estate Transactions
|
|
33
|
|
|
(54
|
)
|
|
349
|
|
|||
Non-Water Sales Earnings
|
|
1,167
|
|
|
1,219
|
|
|
1,394
|
|
|||
Allowance for Funds Used During Construction
|
|
774
|
|
|
1,198
|
|
|
530
|
|
|||
Other
|
|
(2,308
|
)
|
|
(1,009
|
)
|
|
(214
|
)
|
|||
Total Other Income (Loss), Net of Taxes
|
|
(334
|
)
|
|
1,354
|
|
|
2,059
|
|
|||
Interest and Debt Expenses
|
|
|
|
|
|
|
|
|
|
|||
Interest on Long-Term Debt
|
|
9,054
|
|
|
7,714
|
|
|
7,087
|
|
|||
Other Interest Income, Net
|
|
(359
|
)
|
|
(922
|
)
|
|
(458
|
)
|
|||
Amortization of Debt Expense and Premium, Net
|
|
146
|
|
|
124
|
|
|
108
|
|
|||
Total Interest and Debt Expenses
|
|
8,841
|
|
|
6,916
|
|
|
6,737
|
|
|||
Net Income
|
|
25,054
|
|
|
23,387
|
|
|
22,761
|
|
|||
Preferred Stock Dividend Requirement
|
|
38
|
|
|
38
|
|
|
38
|
|
|||
Total Net Income Applicable to Common Stock
|
|
$
|
25,016
|
|
|
$
|
23,349
|
|
|
$
|
22,723
|
|
Weighted Average Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
11,540
|
|
|
11,009
|
|
|
10,958
|
|
|||
Diluted
|
|
11,762
|
|
|
11,228
|
|
|
11,164
|
|
|||
Earnings Per Common Share:
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
$
|
2.17
|
|
|
$
|
2.12
|
|
|
$
|
2.07
|
|
Diluted
|
|
$
|
2.13
|
|
|
$
|
2.08
|
|
|
$
|
2.04
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|||
For the Years Ended December 31, (in thousands)
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
|
|
|
|
|
|
|
||||||
Net Income
|
|
$
|
25,054
|
|
|
$
|
23,387
|
|
|
$
|
22,761
|
|
Other Comprehensive Income (Loss), net of tax
|
|
|
|
|
|
|
|
|
|
|||
Adjustment to post-retirement benefit plans, net of tax benefit
|
|
|
|
|
|
|
|
|
|
|||
(expense) of $(419), $15, and $(505) in 2017, 2016, and 2015, respectively
|
|
289
|
|
|
(24
|
)
|
|
765
|
|
|||
Unrealized Investment gain (loss), net of tax (expense) benefit of $(13),
|
|
|
|
|
|
|
|
|
|
|||
$(22) and $62, in 2017, 2016, and 2015, respectively
|
|
207
|
|
|
35
|
|
|
(97
|
)
|
|||
Other Comprehensive Income, net of tax
|
|
$
|
496
|
|
|
$
|
11
|
|
|
$
|
668
|
|
Comprehensive Income
|
|
$
|
25,550
|
|
|
$
|
23,398
|
|
|
$
|
23,429
|
|
|
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
||||
December 31, (in thousands, except share amounts)
|
|
2017
|
|
|
2016
|
|
||
ASSETS
|
|
|
|
|
||||
Utility Plant
|
|
$
|
927,289
|
|
|
$
|
777,860
|
|
Construction Work in Progress
|
|
11,761
|
|
|
33,748
|
|
||
|
|
939,050
|
|
|
811,608
|
|
||
Accumulated Provision for Depreciation
|
|
(241,327
|
)
|
|
(210,212
|
)
|
||
Net Utility Plant
|
|
697,723
|
|
|
601,396
|
|
||
Other Property and Investments
|
|
10,662
|
|
|
9,071
|
|
||
Cash and Cash Equivalents
|
|
3,618
|
|
|
1,564
|
|
||
Accounts Receivable (Less Allowance, 2017 - $1,265; 2016 - $1,100)
|
|
14,965
|
|
|
13,024
|
|
||
Accrued Unbilled Revenues
|
|
8,481
|
|
|
8,171
|
|
||
Materials and Supplies, at Average Cost
|
|
1,593
|
|
|
1,536
|
|
||
Prepayments and Other Current Assets
|
|
7,021
|
|
|
5,069
|
|
||
Total Current Assets
|
|
35,678
|
|
|
29,364
|
|
||
Unrecovered Income Taxes - Regulatory Asset
|
|
66,631
|
|
|
93,264
|
|
||
Pension Benefits - Regulatory Asset
|
|
11,339
|
|
|
12,266
|
|
||
Post-Retirement Benefits Other Than Pension - Regulatory Asset
|
|
116
|
|
|
265
|
|
||
Goodwill
|
|
67,016
|
|
|
30,427
|
|
||
Deferred Charges and Other Costs
|
|
9,618
|
|
|
8,449
|
|
||
Total Regulatory and Other Long-Term Assets
|
|
154,720
|
|
|
144,671
|
|
||
Total Assets
|
|
$
|
898,783
|
|
|
$
|
784,502
|
|
CAPITALIZATION AND LIABILITIES
|
|
|
|
|
|
|
||
Common Stockholders’ Equity:
|
|
|
|
|
|
|
||
Common Stock Without Par Value: Authorized - 25,000,000 Shares
|
|
|
|
|
|
|
||
Issued and Outstanding: 2017 - 12,065,016; 2016 - 11,248,458
|
|
$
|
191,641
|
|
|
$
|
145,739
|
|
Retained Earnings
|
|
102,417
|
|
|
91,213
|
|
||
Accumulated Other Comprehensive Loss
|
|
(428
|
)
|
|
(924
|
)
|
||
Common Stockholders’ Equity
|
|
293,630
|
|
|
236,028
|
|
||
Preferred Stock
|
|
772
|
|
|
772
|
|
||
Long-Term Debt
|
|
253,367
|
|
|
197,047
|
|
||
Total Capitalization
|
|
547,769
|
|
|
433,847
|
|
||
Current Portion of Long-Term Debt
|
|
6,173
|
|
|
4,859
|
|
||
Interim Bank Loans Payable
|
|
19,281
|
|
|
32,953
|
|
||
Accounts Payable and Accrued Expenses
|
|
11,319
|
|
|
13,116
|
|
||
Accrued Interest
|
|
1,439
|
|
|
1,012
|
|
||
Current Portion of Refund to Customers - Regulatory Liability
|
|
64
|
|
|
855
|
|
||
Other Current Liabilities
|
|
3,262
|
|
|
2,330
|
|
||
Total Current Liabilities
|
|
41,538
|
|
|
55,125
|
|
||
Advances for Construction
|
|
20,024
|
|
|
19,127
|
|
||
Deferred Federal and State Income Taxes
|
|
33,579
|
|
|
50,558
|
|
||
Unfunded Future Income Taxes
|
|
58,384
|
|
|
90,977
|
|
||
Long-Term Compensation Arrangements
|
|
32,649
|
|
|
33,540
|
|
||
Unamortized Investment Tax Credits - Regulatory Liability
|
|
1,133
|
|
|
1,189
|
|
||
Excess Accumulated Deferred Income Tax - Regulatory Liability
|
|
30,937
|
|
|
4,373
|
|
||
Refund to Customers - Regulatory Liability
|
|
—
|
|
|
108
|
|
||
Other Long-Term Liabilities
|
|
1,241
|
|
|
701
|
|
||
Total Long-Term Liabilities
|
|
177,947
|
|
|
200,573
|
|
||
Contributions in Aid of Construction
|
|
131,529
|
|
|
94,957
|
|
||
Commitments and Contingencies
|
|
—
|
|
|
—
|
|
||
Total Capitalization and Liabilities
|
|
$
|
898,783
|
|
|
$
|
784,502
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
||||||
For the Years Ended December 31, (in thousands)
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
Operating Activities:
|
|
|
|
|
|
|
||||||
Net Income
|
|
$
|
25,054
|
|
|
$
|
23,387
|
|
|
$
|
22,761
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
|
|
|
|
|
|
|
|
|
|
|||
Deferred Revenues
|
|
(3,945
|
)
|
|
(893
|
)
|
|
(1,344
|
)
|
|||
Provision for Deferred Income Taxes and Investment Tax Credits, Net
|
|
3,387
|
|
|
2,950
|
|
|
(7,502
|
)
|
|||
Allowance for Funds Used During Construction
|
|
(774
|
)
|
|
(1,198
|
)
|
|
(530
|
)
|
|||
Depreciation and Amortization (including $775 in 2017, $732 in 2016, and $27 in 2015 charged to other accounts)
|
|
17,459
|
|
|
13,173
|
|
|
12,898
|
|
|||
Loss (Gain) on Real Estate Transactions
|
|
(33
|
)
|
|
54
|
|
|
(349
|
)
|
|||
Change in Assets and Liabilities:
|
|
|
|
|
|
|
|
|
|
|||
(Increase) Decrease in Accounts Receivable and Accrued Unbilled Revenues
|
|
(1,053
|
)
|
|
(1,925
|
)
|
|
984
|
|
|||
Decrease (Increase) in Other Current Assets
|
|
(1,278
|
)
|
|
338
|
|
|
6,540
|
|
|||
(Increase) Decrease in Other Non-Current Items, Net
|
|
200
|
|
|
(2,741
|
)
|
|
11,383
|
|
|||
Increase (Decrease) in Accounts Payable, Accrued Expenses and Other Current Liabilities
|
|
(2,404
|
)
|
|
176
|
|
|
(3,695
|
)
|
|||
Total Adjustments
|
|
11,559
|
|
|
9,934
|
|
|
18,385
|
|
|||
Net Cash and Cash Equivalents Provided by Operating Activities
|
|
36,613
|
|
|
33,321
|
|
|
41,146
|
|
|||
Investing Activities:
|
|
|
|
|
|
|
|
|
|
|||
Additions to Utility Plant
|
|
(53,022
|
)
|
|
(66,689
|
)
|
|
(48,025
|
)
|
|||
Cash portion of The Avon Water Company Acquisition
|
|
(6,134
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds on Real Estate Transactions
|
|
212
|
|
|
9
|
|
|
14
|
|
|||
Cash Acquired
|
|
1,791
|
|
|
—
|
|
|
—
|
|
|||
Release (Receipt) of Restricted Cash
|
|
—
|
|
|
846
|
|
|
(846
|
)
|
|||
Net Cash and Cash Equivalents Used in Investing Activities
|
|
(57,153
|
)
|
|
(65,834
|
)
|
|
(48,857
|
)
|
|||
Financing Activities:
|
|
|
|
|
|
|
|
|
|
|||
Net Proceeds from Interim Bank Loans
|
|
19,281
|
|
|
32,953
|
|
|
16,085
|
|
|||
Net Repayment of Interim Bank Loans
|
|
(35,453
|
)
|
|
(16,085
|
)
|
|
(1,991
|
)
|
|||
Repayment of Long-Term Debt
|
|
(5,195
|
)
|
|
(22,772
|
)
|
|
(2,476
|
)
|
|||
Proceeds from Issuance of Long-Term Debt
|
|
55,000
|
|
|
49,930
|
|
|
4,352
|
|
|||
Proceeds from Issuance of Common Stock
|
|
1,404
|
|
|
1,610
|
|
|
1,536
|
|
|||
Costs Incurred to Issue Long-Term Debt and Common Stock
|
|
(2
|
)
|
|
(88
|
)
|
|
(37
|
)
|
|||
Advances from Others for Construction
|
|
1,479
|
|
|
350
|
|
|
251
|
|
|||
Cash Dividends Paid
|
|
(13,920
|
)
|
|
(12,552
|
)
|
|
(11,753
|
)
|
|||
Net Cash and Cash Equivalents Provided by Financing Activities
|
|
22,594
|
|
|
33,346
|
|
|
5,967
|
|
|||
Net Increase (Decrease) in Cash and Cash Equivalents
|
|
2,054
|
|
|
833
|
|
|
(1,744
|
)
|
|||
Cash and Cash Equivalents at Beginning of Year
|
|
1,564
|
|
|
731
|
|
|
2,475
|
|
|||
Cash and Cash Equivalents at End of Year
|
|
$
|
3,618
|
|
|
$
|
1,564
|
|
|
$
|
731
|
|
Non-Cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
|
|
|||
Stock-for-stock acquisition of The Heritage Village Water Company
|
|
$
|
16,903
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Stock-for-stock acquisition of The Avon Water Company
|
|
$
|
26,949
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-Cash Contributed Utility Plant (see Note 1 for details)
|
|
$
|
2,741
|
|
|
$
|
1,394
|
|
|
$
|
1,282
|
|
Supplemental Disclosures of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
|||
Cash Paid During the Year for:
|
|
|
|
|
|
|
|
|
|
|||
Interest
|
|
$
|
8,445
|
|
|
$
|
6,678
|
|
|
$
|
6,761
|
|
State and Federal Income Taxes
|
|
$
|
572
|
|
|
$
|
445
|
|
|
$
|
537
|
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
|
|
|
(in thousands)
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets:
|
|
|
|
||||
Pension Benefits and Post-Retirement Benefits Other Than Pension
|
$
|
11,455
|
|
|
$
|
12,531
|
|
Unrecovered Income Taxes
|
66,631
|
|
|
93,264
|
|
||
Deferred revenue (included in Prepayments and Other Current Assets and Deferred Charges and Other Costs)
|
6,574
|
|
|
3,910
|
|
||
Other (included in Prepayments and Other Current Assets and Deferred Charges and Other Costs)
|
5,202
|
|
|
4,276
|
|
||
Total regulatory assets
|
$
|
89,862
|
|
|
$
|
113,981
|
|
Liabilities:
|
|
|
|
|
|
||
Other (included in Other Current Liabilities)
|
$
|
1,117
|
|
|
$
|
1,710
|
|
Unamortized Investment Tax Credits
|
1,133
|
|
|
1,189
|
|
||
Refunds to Customers (including Current Portion of Refund to Customers)
|
64
|
|
|
963
|
|
||
Unfunded Future Income Taxes (including Other Long-Term Liabilities)
|
58,384
|
|
|
90,977
|
|
||
Excess Accumulated Deferred Income Tax
|
30,937
|
|
|
4,373
|
|
||
Total regulatory liabilities
|
$
|
91,635
|
|
|
$
|
99,212
|
|
1.
|
Upon implementation of new rates under the Agreement, until such time as new rates are adopted in a general rate case, through a temporary modification of the earnings sharing mechanism, Connecticut Water customers will receive
|
2.
|
Connecticut Water agrees it will not file for a general increase of Connecticut Water’s base rates to be effective before January 1, 2020;
|
3.
|
The pending proceeding initiated by PURA in Docket No. 09-12-11RE03, Application of The Connecticut Water Company for Amended Rates – Federal Tax Cuts and Jobs Act shall be closed; and
|
4.
|
Connecticut Water shall continue to make investments in infrastructure replacement consistent with its approved WICA plan. Connecticut Water shall be allowed to continue to pursue recovery of eligible projects through WICA.
|
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Additions to Utility Plant:
|
|
|
|
|
|
||||||
Company Financed
|
$
|
51,543
|
|
|
$
|
66,339
|
|
|
$
|
47,774
|
|
Allowance for Funds Used During Construction
|
774
|
|
|
1,198
|
|
|
530
|
|
|||
Subtotal – Utility Plant Increase to Rate Base
|
52,317
|
|
|
67,537
|
|
|
48,304
|
|
|||
Advances from Others for Construction
|
1,479
|
|
|
350
|
|
|
251
|
|
|||
Net Additions to Utility Plant
|
$
|
53,796
|
|
|
$
|
67,887
|
|
|
$
|
48,555
|
|
Years ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator (in thousands)
|
|
|
|
|
|
||||||
Basic Net Income Applicable to Common Stock
|
$
|
25,016
|
|
|
$
|
23,349
|
|
|
$
|
22,723
|
|
Diluted Net Income Applicable to Common Stock
|
$
|
25,016
|
|
|
$
|
23,349
|
|
|
$
|
22,723
|
|
Denominator (in thousands)
|
|
|
|
|
|
|
|
|
|||
Basic Weighted Average Shares Outstanding
|
11,540
|
|
|
11,009
|
|
|
10,958
|
|
|||
Dilutive Effect of Stock Awards
|
222
|
|
|
219
|
|
|
206
|
|
|||
Diluted Weighted Average Shares Outstanding
|
11,762
|
|
|
11,228
|
|
|
11,164
|
|
|||
Earnings per Share
|
|
|
|
|
|
|
|
|
|||
Basic Earnings per Share
|
$
|
2.17
|
|
|
$
|
2.12
|
|
|
$
|
2.07
|
|
Dilutive Effect of Stock Awards
|
0.04
|
|
|
0.04
|
|
|
0.03
|
|
|||
Diluted Earnings per Share
|
$
|
2.13
|
|
|
$
|
2.08
|
|
|
$
|
2.04
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Federal Classified as Operating (Benefit) Expense
|
|
$
|
(1,277
|
)
|
|
$
|
1,782
|
|
|
$
|
(562
|
)
|
Federal Classified as Other Utility Income
|
|
434
|
|
|
385
|
|
|
409
|
|
|||
Federal Classified as Other Income (Deduction)
|
|
|
|
|
|
|
|
|
|
|||
Land Sales and Donations
|
|
17
|
|
|
57
|
|
|
(70
|
)
|
|||
Non-Water Sales
|
|
774
|
|
|
702
|
|
|
664
|
|
|||
Other
|
|
503
|
|
|
(686
|
)
|
|
(832
|
)
|
|||
Total Federal Income Tax (Benefit) Expense
|
|
451
|
|
|
2,240
|
|
|
(391
|
)
|
|||
State Classified as Operating (Benefit) Expense
|
|
(716
|
)
|
|
788
|
|
|
(257
|
)
|
|||
State Classified as Other Utility Income
|
|
104
|
|
|
92
|
|
|
98
|
|
|||
State Classified as Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|||
Land Sales and Donations
|
|
5
|
|
|
—
|
|
|
(287
|
)
|
|||
Non-Water Sales
|
|
175
|
|
|
172
|
|
|
196
|
|
|||
Other
|
|
149
|
|
|
(126
|
)
|
|
(128
|
)
|
|||
Total State Income Tax (Benefit) Expense
|
|
(283
|
)
|
|
926
|
|
|
(378
|
)
|
|||
Total Income Tax (Benefit) Expense
|
|
$
|
168
|
|
|
$
|
3,166
|
|
|
$
|
(769
|
)
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current Income Taxes
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
$
|
315
|
|
State
|
|
521
|
|
|
463
|
|
|
201
|
|
|||
Total Current
|
|
521
|
|
|
448
|
|
|
516
|
|
|||
Deferred Income Taxes, Net
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
|
|
|
|
|
|
|
|
|||
Investment Tax Credit
|
|
(76
|
)
|
|
(75
|
)
|
|
(75
|
)
|
|||
Excess Accumulated Deferred Taxes
|
|
(293
|
)
|
|
(110
|
)
|
|
192
|
|
|||
Excess Accumulated Deferred Taxes - Tax Act
|
|
1,538
|
|
|
—
|
|
|
—
|
|
|||
Deferred Revenue
|
|
731
|
|
|
(353
|
)
|
|
(754
|
)
|
|||
Land Donations
|
|
—
|
|
|
37
|
|
|
(179
|
)
|
|||
Depreciation
|
|
2,151
|
|
|
1,769
|
|
|
660
|
|
|||
Net Operating Loss Carry-forwards
|
|
817
|
|
|
(1,258
|
)
|
|
(1,171
|
)
|
|||
NOL Carry-forwards valuation allowance
|
|
(613
|
)
|
|
—
|
|
|
—
|
|
|||
Provision for uncertain positions
|
|
(3,876
|
)
|
|
2,487
|
|
|
874
|
|
|||
Other
|
|
72
|
|
|
(242
|
)
|
|
(253
|
)
|
|||
Total Federal
|
|
451
|
|
|
2,255
|
|
|
(706
|
)
|
|||
State
|
|
|
|
|
|
|
|
|
|
|||
Land Donations
|
|
—
|
|
|
55
|
|
|
41
|
|
|||
Provision for uncertain positions
|
|
(958
|
)
|
|
611
|
|
|
41
|
|
|||
Other
|
|
154
|
|
|
(203
|
)
|
|
(661
|
)
|
|||
Total State
|
|
(804
|
)
|
|
463
|
|
|
(579
|
)
|
|||
Total Deferred Income Taxes
|
|
(353
|
)
|
|
2,718
|
|
|
(1,285
|
)
|
|||
Total Income Tax
|
|
$
|
168
|
|
|
$
|
3,166
|
|
|
$
|
(769
|
)
|
(in thousands)
|
|
2017
|
|
2016
|
||||
Unrecovered Income Taxes - Regulatory Asset
|
|
$
|
(66,631
|
)
|
|
$
|
(93,264
|
)
|
Deferred Federal and State Income Taxes
|
|
33,579
|
|
|
50,558
|
|
||
Unfunded Future Income Taxes
|
|
58,384
|
|
|
90,977
|
|
||
Unamortized Investment Tax Credits - Regulatory Liability
|
|
1,133
|
|
|
1,189
|
|
||
Net Deferred Income Tax Liability
|
|
$
|
26,465
|
|
|
$
|
49,460
|
|
(in thousands)
|
|
2017
|
|
2016
|
||||
Tax Credit Carry-forward (1)
|
|
$
|
(1,092
|
)
|
|
$
|
(968
|
)
|
Charitable Contribution Carry-forwards (2)
|
|
(257
|
)
|
|
(389
|
)
|
||
Valuation Allowance on Charitable Contributions
|
|
63
|
|
|
107
|
|
||
Prepaid Income Taxes on CIAC
|
|
31
|
|
|
58
|
|
||
Net Operating Loss Carry-forwards (3)
|
|
(3,806
|
)
|
|
(5,132
|
)
|
||
Valuation Allowance on Net Operating Losses
|
|
1,671
|
|
|
1,471
|
|
||
Deferred Revenue
|
|
1,644
|
|
|
1,513
|
|
||
Other Comprehensive Income
|
|
(158
|
)
|
|
(589
|
)
|
||
Accelerated Depreciation
|
|
34,989
|
|
|
51,119
|
|
||
Provision on Repair Deductions
|
|
4,630
|
|
|
9,464
|
|
||
Long-Term Compensation Agreements
|
|
(3,260
|
)
|
|
(4,416
|
)
|
||
Unamortized Investment Tax Credits
|
|
1,133
|
|
|
1,189
|
|
||
Gross-up on Regulatory Liability - Excess Accumulated Deferred Taxes
|
|
(8,247
|
)
|
|
(2,287
|
)
|
||
Other
|
|
(876
|
)
|
|
(1,680
|
)
|
||
Net Deferred Income Tax Liability
|
|
$
|
26,465
|
|
|
$
|
49,460
|
|
(1)
|
State tax credit carry-forwards expire beginning in 2019 and ending in 2040.
|
(2)
|
Charitable Contribution carry-forwards expire beginning with the filing of the 2017 Federal and State Tax Returns in 2018 and ending in 2021.
|
(3)
|
Net operating loss carry-forwards expire beginning in 2029 and ending in 2036.
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Pre-Tax Income
|
|
|
|
|
|
|
||||||
Net Income
|
|
$
|
25,054
|
|
|
$
|
23,387
|
|
|
$
|
22,761
|
|
Income Taxes
|
|
168
|
|
|
3,166
|
|
|
(769
|
)
|
|||
Total Pre-Tax Income
|
|
$
|
25,222
|
|
|
$
|
26,553
|
|
|
$
|
21,992
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Federal Statutory Tax Rate
|
|
34.0
|
%
|
|
34.0
|
%
|
|
34.0
|
%
|
Tax Effect Differences:
|
|
|
|
|
|
|
|
|
|
State Income Taxes Net of Federal Benefit
|
|
(0.9
|
)%
|
|
2.6
|
%
|
|
—
|
%
|
Property Related Items
|
|
(19.9
|
)%
|
|
(30.4
|
)%
|
|
(19.2
|
)%
|
Pension Costs
|
|
(2.3
|
)%
|
|
(0.4
|
)%
|
|
(1.7
|
)%
|
Repair Regulatory Liability
|
|
(1.2
|
)%
|
|
(3.9
|
)%
|
|
(11.5
|
)%
|
Change in Estimate of Prior Year Income Tax Expense
|
|
2.7
|
%
|
|
0.3
|
%
|
|
(10.6
|
)%
|
Provision for Uncertain Tax Positions
|
|
(16.7
|
)%
|
|
10.2
|
%
|
|
4.1
|
%
|
Valuation Allowance
|
|
(2.3
|
)%
|
|
0.2
|
%
|
|
—
|
%
|
Impact of Tax Act
|
|
6.1
|
%
|
|
—
|
%
|
|
—
|
%
|
Other
|
|
1.2
|
%
|
|
(0.7
|
)%
|
|
1.4
|
%
|
Effective Income Tax Rate
|
|
0.7
|
%
|
|
11.9
|
%
|
|
(3.5
|
)%
|
(in thousands, except share data)
|
Shares
|
|
Issuance Amount
|
|
Expense
|
|
Total
|
|||||||
Balance, January 1, 2015
|
11,124,630
|
|
|
$
|
145,774
|
|
|
$
|
(4,090
|
)
|
|
$
|
141,684
|
|
Stock and equivalents issued through Performance Stock Program, Net of Forfeitures
|
25,575
|
|
|
1,314
|
|
|
—
|
|
|
1,314
|
|
|||
Dividend Reinvestment Plan
|
42,677
|
|
|
1,536
|
|
|
—
|
|
|
1,536
|
|
|||
Balance, December 31, 2015
|
11,192,882
|
|
|
148,624
|
|
|
(4,090
|
)
|
|
144,534
|
|
|||
Stock and equivalents issued through Performance Stock Program, Net of Forfeitures
|
22,128
|
|
|
(405
|
)
|
|
—
|
|
|
(405
|
)
|
|||
Dividend Reinvestment Plan
|
33,448
|
|
|
1,610
|
|
|
—
|
|
|
1,610
|
|
|||
Balance, December 31, 2016
|
11,248,458
|
|
|
149,829
|
|
|
(4,090
|
)
|
|
145,739
|
|
|||
Stock and equivalents issued through Performance Stock Program, Net of Forfeitures
|
5,925
|
|
|
645
|
|
|
—
|
|
|
645
|
|
|||
Shares issued to acquire regulated water companies
|
785,814
|
|
|
43,853
|
|
|
—
|
|
|
43,853
|
|
|||
Dividend Reinvestment Plan
|
24,819
|
|
|
1,404
|
|
|
—
|
|
|
1,404
|
|
|||
Balance, December 31, 2017 (1)
|
12,065,016
|
|
|
$
|
195,731
|
|
|
$
|
(4,090
|
)
|
|
$
|
191,641
|
|
(1)
|
Includes
56,523
restricted shares and
205,329
common stock equivalent shares issued through the Performance Stock Programs through
December 31, 2017
.
|
(in thousands, except per share data)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance, beginning of year
|
|
$
|
91,213
|
|
|
$
|
80,378
|
|
|
$
|
69,370
|
|
Net Income
|
|
25,054
|
|
|
23,387
|
|
|
22,761
|
|
|||
Sub-total
|
|
116,267
|
|
|
103,765
|
|
|
92,131
|
|
|||
Impact of Tax Act on excess accumulated deferred income tax
|
|
70
|
|
|
—
|
|
|
—
|
|
|||
Dividends declared:
|
|
|
|
|
|
|
||||||
Cumulative Preferred Stock, Series A, $0.80 per share
|
|
12
|
|
|
12
|
|
|
12
|
|
|||
Cumulative Preferred Stock, Series $0.90, $0.90 per share
|
|
26
|
|
|
26
|
|
|
26
|
|
|||
Common Stock:
|
|
|
|
|
|
|
||||||
$1.175, $1.115 and $1.05 per Common Share in 2017, 2016 and 2015, respectively
|
|
13,882
|
|
|
12,514
|
|
|
11,715
|
|
|||
Total Dividends Declared
|
|
13,920
|
|
|
12,552
|
|
|
11,753
|
|
|||
Balance, end of year
|
|
$
|
102,417
|
|
|
$
|
91,213
|
|
|
$
|
80,378
|
|
(in thousands)
|
|
Unrealized Gains on Investments
|
|
Defined Benefit Items
|
|
Total
|
||||||
Balance as of January 1, 2015 (a)
|
|
$
|
298
|
|
|
$
|
(1,901
|
)
|
|
$
|
(1,603
|
)
|
Other Comprehensive Income (Loss) Before Reclassification
|
|
(195
|
)
|
|
582
|
|
|
387
|
|
|||
Amounts Reclassified from AOCI
|
|
97
|
|
|
184
|
|
|
281
|
|
|||
Net current-period Other Comprehensive Income (Loss)
|
|
(98
|
)
|
|
766
|
|
|
668
|
|
|||
Balance as of December 31, 2015
|
|
$
|
200
|
|
|
$
|
(1,135
|
)
|
|
$
|
(935
|
)
|
Other Comprehensive (Loss) Income Before Reclassification
|
|
24
|
|
|
(227
|
)
|
|
(203
|
)
|
|||
Amounts Reclassified from AOCI
|
|
11
|
|
|
203
|
|
|
214
|
|
|||
Net current-period Other Comprehensive (Loss) Income
|
|
35
|
|
|
(24
|
)
|
|
11
|
|
|||
Balance as of December 31, 2016
|
|
$
|
235
|
|
|
$
|
(1,159
|
)
|
|
$
|
(924
|
)
|
Other Comprehensive Income (Loss) Before Reclassification
|
|
152
|
|
|
74
|
|
|
226
|
|
|||
Amounts Reclassified from AOCI
|
|
55
|
|
|
215
|
|
|
270
|
|
|||
Net current-period Other Comprehensive Income (Loss)
|
|
207
|
|
|
289
|
|
|
496
|
|
|||
Balance as of December 31, 2017
|
|
$
|
442
|
|
|
$
|
(870
|
)
|
|
$
|
(428
|
)
|
|
|
|
|
|
|
|
||||||
(a) All amounts shown are net of tax. Amounts in parentheses indicate loss.
|
Details about Other AOCI Components
(in thousands)
|
|
Amounts Reclassified from AOCI for the Year Ended December 31, 2017(a)
|
|
Amounts Reclassified from AOCI for the Year Ended December 31, 2016(a)
|
|
Amounts Reclassified from AOCI for the Year Ended December 31, 2015(a)
|
|
Affected Line Items on Income Statement
|
||||||
Realized Gains on Investments
|
|
$
|
84
|
|
|
$
|
17
|
|
|
$
|
148
|
|
|
Other
|
Tax expense
|
|
(29
|
)
|
|
(6
|
)
|
|
(51
|
)
|
|
Other
|
|||
Total Reclassified from AOCI
|
|
55
|
|
|
11
|
|
|
97
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||||
Amortization of Recognized Net Gain from Defined Benefit Items
|
|
325
|
|
|
308
|
|
|
281
|
|
|
Other (b)
|
|||
Tax expense
|
|
(110
|
)
|
|
(105
|
)
|
|
(97
|
)
|
|
Other
|
|||
Total Reclassified from AOCI
|
|
215
|
|
|
203
|
|
|
184
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||||
Total Reclassifications for the period, net of tax
|
|
$
|
270
|
|
|
$
|
214
|
|
|
$
|
281
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(a) Amounts in parentheses indicate loss/expense.
|
||||||||||||||
(b) Included in computation of net periodic pension cost (see Note 12 “Long-Term Compensation Arrangements” for additional details).
|
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Asset Type:
|
|
|
|
|
|
|
|
||||||||
Money Market Fund
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
70
|
|
Mutual Funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity Funds (1)
|
2,051
|
|
|
—
|
|
|
—
|
|
|
2,051
|
|
||||
Fixed Income Funds (2)
|
642
|
|
|
—
|
|
|
—
|
|
|
642
|
|
||||
Total
|
$
|
2,763
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,763
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Asset Type:
|
|
|
|
|
|
|
|
||||||||
Money Market Fund
|
$
|
122
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
122
|
|
Mutual Funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity Funds (1)
|
1,662
|
|
|
—
|
|
|
—
|
|
|
1,662
|
|
||||
Fixed Income Funds (2)
|
534
|
|
|
—
|
|
|
—
|
|
|
534
|
|
||||
Total
|
$
|
2,318
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,318
|
|
(1)
|
Mutual funds consisting primarily of equity securities.
|
(2)
|
Mutual funds consisting primarily of fixed income securities.
|
(in thousands)
|
2017
|
|
2016
|
|||||||
4.09%
|
|
CTWS
|
Term Loan Note and Supplement A, Due 2027
|
$
|
12,358
|
|
|
$
|
13,437
|
|
4.15%
|
|
CTWS
|
CoBank Term Note Payable, Due 2037
|
14,881
|
|
|
—
|
|
||
Total CTWS
|
27,239
|
|
|
13,437
|
|
|||||
Var.
|
|
Connecticut Water
|
2004 Series Variable Rate, Due 2029
|
12,500
|
|
|
12,500
|
|
||
Var.
|
|
Connecticut Water
|
2004 Series A, Due 2028
|
5,000
|
|
|
5,000
|
|
||
Var.
|
|
Connecticut Water
|
2004 Series B, Due 2028
|
4,550
|
|
|
4,550
|
|
||
5.00%
|
|
Connecticut Water
|
2011 A Series, Due 2021
|
22,920
|
|
|
23,115
|
|
||
3.16%
|
|
Connecticut Water
|
CoBank Note Payable, Due 2020
|
8,000
|
|
|
8,000
|
|
||
3.51%
|
|
Connecticut Water
|
CoBank Note Payable, Due 2022
|
14,795
|
|
|
14,795
|
|
||
4.29%
|
|
Connecticut Water
|
CoBank Note Payable, Due 2028
|
17,020
|
|
|
17,020
|
|
||
4.72%
|
|
Connecticut Water
|
CoBank Note Payable, Due 2032
|
14,795
|
|
|
14,795
|
|
||
4.75%
|
|
Connecticut Water
|
CoBank Note Payable, Due 2033
|
14,550
|
|
|
14,550
|
|
||
4.36%
|
|
Connecticut Water
|
CoBank Note Payable, Due May 2036
|
30,000
|
|
|
30,000
|
|
||
4.04%
|
|
Connecticut Water
|
CoBank Note Payable, Due July 2036
|
19,930
|
|
|
19,930
|
|
||
3.53%
|
|
Connecticut Water
|
NY Life Senior Note, Due September 2037
|
35,000
|
|
|
—
|
|
||
Total The Connecticut Water Company
|
199,060
|
|
|
164,255
|
|
|||||
4.75%
|
|
HVWC
|
2011 Farmington Bank Loan, Due 2034
|
4,464
|
|
|
—
|
|
||
3.05%
|
|
Avon Water
|
Mortgage Note Payable, Due 2033
|
3,302
|
|
|
—
|
|
||
8.95%
|
|
Maine Water
|
1994 Series G, Due 2024
|
6,300
|
|
|
7,200
|
|
||
2.68%
|
|
Maine Water
|
1999 Series J, Due 2019
|
170
|
|
|
254
|
|
||
0.00%
|
|
Maine Water
|
2001 Series K, Due 2031
|
574
|
|
|
615
|
|
||
2.58%
|
|
Maine Water
|
2002 Series L, Due 2022
|
60
|
|
|
67
|
|
||
1.53%
|
|
Maine Water
|
2003 Series M, Due 2023
|
321
|
|
|
341
|
|
||
1.73%
|
|
Maine Water
|
2004 Series N, Due 2024
|
341
|
|
|
371
|
|
||
0.00%
|
|
Maine Water
|
2004 Series O, Due 2034
|
113
|
|
|
120
|
|
||
1.76%
|
|
Maine Water
|
2006 Series P, Due 2026
|
361
|
|
|
391
|
|
||
1.57%
|
|
Maine Water
|
2009 Series R, Due 2029
|
207
|
|
|
217
|
|
||
0.00%
|
|
Maine Water
|
2009 Series S, Due 2029
|
538
|
|
|
583
|
|
||
0.00%
|
|
Maine Water
|
2009 Series T, Due 2029
|
1,509
|
|
|
1,634
|
|
||
0.00%
|
|
Maine Water
|
2012 Series U, Due 2042
|
148
|
|
|
154
|
|
||
1.00%
|
|
Maine Water
|
2013 Series V, Due 2033
|
1,310
|
|
|
1,335
|
|
||
2.52%
|
|
Maine Water
|
CoBank Note Payable, Due 2017
|
—
|
|
|
1,965
|
|
||
4.24%
|
|
Maine Water
|
CoBank Note Payable, Due 2024
|
4,500
|
|
|
4,500
|
|
||
4.18%
|
|
Maine Water
|
CoBank Note Payable, Due 2026
|
5,000
|
|
|
—
|
|
||
7.72%
|
|
Maine Water
|
Series L, Due 2018
|
2,250
|
|
|
2,250
|
|
||
2.40%
|
|
Maine Water
|
Series N, Due 2022
|
1,026
|
|
|
1,101
|
|
||
1.86%
|
|
Maine Water
|
Series O, Due 2025
|
750
|
|
|
790
|
|
||
2.23%
|
|
Maine Water
|
Series P, Due 2028
|
1,264
|
|
|
1,294
|
|
||
0.01%
|
|
Maine Water
|
Series Q, Due 2035
|
1,678
|
|
|
1,771
|
|
||
1.00%
|
|
Maine Water
|
Series R, Due 2025
|
2,009
|
|
|
2,250
|
|
||
Various
|
|
Maine Water
|
Various Capital Leases
|
2
|
|
|
8
|
|
||
Total The Maine Water Company
|
30,431
|
|
|
29,211
|
|
|||||
Add: Acquisition Fair Value Adjustment
|
(51
|
)
|
|
321
|
|
|||||
Less: Current Portion
|
(6,173
|
)
|
|
(4,859
|
)
|
|||||
Less: Unamortized Debt Issuance Expense
|
(4,905
|
)
|
|
(5,318
|
)
|
|||||
Total Long-Term Debt
|
$
|
253,367
|
|
|
$
|
197,047
|
|
(in thousands)
|
|
|
||
2018
|
|
$
|
6,173
|
|
2019
|
|
$
|
4,054
|
|
2020
|
|
$
|
12,086
|
|
2021
|
|
$
|
26,227
|
|
2022
|
|
$
|
19,125
|
|
(in thousands, except share data)
|
|
2017
|
|
2016
|
||||
Connecticut Water Service, Inc.
|
|
|
|
|
||||
Cumulative Series A Voting, $20 Par Value; Authorized, Issued and Outstanding 15,000 Shares
|
|
$
|
300
|
|
|
$
|
300
|
|
Cumulative Series $0.90 Non-Voting, $16 Par Value; Authorized 50,000 Shares, Issued and Outstanding 29,499
|
|
472
|
|
|
472
|
|
||
Total Preferred Stock
|
|
$
|
772
|
|
|
$
|
772
|
|
(in thousands)
|
2017
|
|
2016
|
||||
Land
|
$
|
15,120
|
|
|
$
|
13,724
|
|
Source of supply
|
38,448
|
|
|
36,405
|
|
||
Pumping
|
51,639
|
|
|
38,902
|
|
||
Water treatment
|
129,428
|
|
|
84,594
|
|
||
Transmission and distribution
|
605,587
|
|
|
530,716
|
|
||
General
|
88,492
|
|
|
75,438
|
|
||
Held for future use
|
219
|
|
|
432
|
|
||
Acquisition Adjustment
|
(1,644
|
)
|
|
(2,351
|
)
|
||
Total
|
$
|
927,289
|
|
|
$
|
777,860
|
|
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Municipal Property Taxes
|
|
$
|
9,580
|
|
|
$
|
8,501
|
|
|
$
|
7,896
|
|
Payroll Taxes
|
|
1,361
|
|
|
1,295
|
|
|
1,398
|
|
|||
Total Taxes Other than Income Taxes
|
|
$
|
10,941
|
|
|
$
|
9,796
|
|
|
$
|
9,294
|
|
(in thousands)
|
2017
|
|
2016
|
||||
Defined Benefit Pension Plan
|
$
|
15,486
|
|
|
$
|
16,628
|
|
Post-Retirement Benefit Other than Pension
|
5,060
|
|
|
5,246
|
|
||
Supplemental Executive Retirement Plan
|
8,796
|
|
|
8,688
|
|
||
Deferred Compensation
|
3,289
|
|
|
2,932
|
|
||
Other Long-Term Compensation
|
18
|
|
|
46
|
|
||
Total Long-Term Compensation Arrangements
|
$
|
32,649
|
|
|
$
|
33,540
|
|
|
2017
|
|
2016
|
||
Equity
|
65
|
%
|
|
65
|
%
|
Fixed Income
|
35
|
%
|
|
35
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
Pension Benefits
(in thousands)
|
2017
|
|
2016
|
||||
Change in benefit obligation:
|
|
|
|
||||
Benefit obligation, beginning of year
|
$
|
79,307
|
|
|
$
|
75,845
|
|
Service cost
|
1,927
|
|
|
1,895
|
|
||
Interest cost
|
3,201
|
|
|
3,212
|
|
||
Actuarial loss (gain)
|
7,533
|
|
|
2,017
|
|
||
Benefits paid
|
(3,295
|
)
|
|
(3,553
|
)
|
||
Administrative expenses
|
(75
|
)
|
|
(109
|
)
|
||
Benefit obligation, end of year
|
$
|
88,598
|
|
|
$
|
79,307
|
|
Change in plan assets:
|
|
|
|
|
|
||
Fair value, beginning of year
|
$
|
62,679
|
|
|
$
|
56,613
|
|
Actual return on plan assets
|
10,832
|
|
|
4,203
|
|
||
Employer contributions
|
2,971
|
|
|
5,525
|
|
||
Benefits paid
|
(3,295
|
)
|
|
(3,553
|
)
|
||
Administrative expenses
|
(75
|
)
|
|
(109
|
)
|
||
Fair value, end of year
|
$
|
73,112
|
|
|
$
|
62,679
|
|
Funded Status
|
$
|
(15,486
|
)
|
|
$
|
(16,628
|
)
|
Amount Recognized in Consolidated Balance Sheets Consisted of:
|
|
|
|
|
|
||
Non-current asset
|
$
|
—
|
|
|
$
|
—
|
|
Current liability
|
—
|
|
|
—
|
|
||
Non-current liability
|
(15,486
|
)
|
|
(16,628
|
)
|
||
Net amount recognized
|
$
|
(15,486
|
)
|
|
$
|
(16,628
|
)
|
Weighted-average assumptions used to determine benefit obligations at December 31:
|
2017
|
|
2016
|
||
Discount rate
|
3.60
|
%
|
|
4.10
|
%
|
Rate of compensation increase
|
4.00
|
%
|
|
4.00
|
%
|
Weighted-average assumptions used to determine net periodic cost for years ended December 31:
|
2017
|
|
2016
|
|
2015
|
|||
Discount rate
|
4.10
|
%
|
|
4.30
|
%
|
|
3.95
|
%
|
Expected long-term return on plan assets
|
7.25
|
%
|
|
7.25
|
%
|
|
7.25
|
%
|
Rate of compensation increase
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
Pension Benefits
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Components of net periodic benefit costs
|
|
|
|
|
|
||||||
Service cost
|
$
|
1,927
|
|
|
$
|
1,895
|
|
|
$
|
2,152
|
|
Interest cost
|
3,201
|
|
|
3,212
|
|
|
3,114
|
|
|||
Expected return on plan assets
|
(4,291
|
)
|
|
(4,080
|
)
|
|
(3,847
|
)
|
|||
Amortization of:
|
|
|
|
|
|
|
|
|
|||
Prior service cost
|
16
|
|
|
16
|
|
|
16
|
|
|||
Net loss
|
2,064
|
|
|
2,049
|
|
|
2,979
|
|
|||
Net Periodic Pension Benefit Costs
|
$
|
2,917
|
|
|
$
|
3,092
|
|
|
$
|
4,414
|
|
Pension Benefits
(in thousands)
|
2017
|
|
2016
|
||||
Change in net loss
|
$
|
1,104
|
|
|
$
|
1,866
|
|
Change in prior service cost
|
—
|
|
|
—
|
|
||
Other - regulatory action
|
—
|
|
|
—
|
|
||
Amortization of prior service cost
|
(16
|
)
|
|
(16
|
)
|
||
Amortization of net loss
|
(2,015
|
)
|
|
(1,998
|
)
|
||
Total recognized to Regulatory Asset
|
$
|
(927
|
)
|
|
$
|
(148
|
)
|
Pension Benefits
(in thousands)
|
2017
|
|
2016
|
||||
Change in net (gain) loss
|
$
|
(112
|
)
|
|
$
|
28
|
|
Change in prior service cost
|
—
|
|
|
—
|
|
||
Amortization of prior service cost
|
—
|
|
|
—
|
|
||
Amortization of net loss
|
(49
|
)
|
|
(51
|
)
|
||
Total recognized to OCI
|
$
|
(161
|
)
|
|
$
|
(23
|
)
|
Amounts Recognized as a Regulatory Asset at December 31:
(in thousands)
|
2017
|
|
2016
|
||||
Prior service cost
|
$
|
55
|
|
|
$
|
70
|
|
Net loss
|
11,284
|
|
|
12,196
|
|
||
Total Recognized as a Regulatory Asset
|
$
|
11,339
|
|
|
$
|
12,266
|
|
Amounts Recognized in OCI at December 31:
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Transition obligation
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net loss
|
154
|
|
|
315
|
|
|
338
|
|
|||
Total Recognized in Other Comprehensive Income
|
$
|
154
|
|
|
$
|
315
|
|
|
$
|
338
|
|
Estimated Net Periodic Benefit Cost Amortizations for the periods January 1 - December 31,:
(in thousands)
|
2018
|
||
Amortization of transition obligation
|
$
|
—
|
|
Amortization of prior service cost
|
15
|
|
|
Amortization of net loss
|
2,679
|
|
|
Total Estimated Net Periodic Benefit Cost Amortizations
|
$
|
2,694
|
|
|
2017
|
|
2016
|
||
Equity
|
65
|
%
|
|
65
|
%
|
Fixed Income
|
35
|
%
|
|
35
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
2017
|
|
|
|
|
|
||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Asset Type:
|
|
|
|
|
|
||||||
Money Market Fund
|
$
|
1,579
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mutual Funds:
|
|
|
|
|
|
||||||
Fixed Income Funds (1)
|
23,752
|
|
|
—
|
|
|
—
|
|
|||
Equity Funds (2)
|
47,781
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
73,112
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2016
|
|
|
|
|
|
||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Asset Type:
|
|
|
|
|
|
||||||
Money Market Fund
|
$
|
1,174
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mutual Funds:
|
|
|
|
|
|
||||||
Fixed Income Funds (1)
|
21,070
|
|
|
—
|
|
|
—
|
|
|||
Equity Funds (2)
|
40,435
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
62,679
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Mutual funds consisting primarily of fixed income securities.
|
(2)
|
Mutual funds consisting primarily of equity securities.
|
(in thousands)
|
|
||
2018
|
$
|
4,680
|
|
2019
|
5,104
|
|
|
2020
|
5,042
|
|
|
2021
|
5,215
|
|
|
2022
|
5,230
|
|
|
Years 2021 – 2025
|
27,896
|
|
PBOP Benefits
(in thousands)
|
2017
|
|
2016
|
||||
Change in benefit obligation:
|
|
|
|
||||
Benefit obligation, beginning of year
|
$
|
13,542
|
|
|
$
|
13,192
|
|
Service cost
|
335
|
|
|
376
|
|
||
Interest cost
|
511
|
|
|
541
|
|
||
Plan participant contributions
|
163
|
|
|
151
|
|
||
Actuarial (gain)
|
384
|
|
|
(351
|
)
|
||
Benefits paid
|
(462
|
)
|
|
(367
|
)
|
||
Benefit obligation, end of year
|
$
|
14,473
|
|
|
$
|
13,542
|
|
Change in plan assets:
|
|
|
|
|
|
||
Fair value, beginning of year
|
$
|
8,345
|
|
|
$
|
8,203
|
|
Actual return on plan assets
|
1,402
|
|
|
346
|
|
||
Employer contributions
|
12
|
|
|
12
|
|
||
Plan participant contributions
|
163
|
|
|
151
|
|
||
Benefits paid
|
(462
|
)
|
|
(367
|
)
|
||
Fair value, end of year
|
$
|
9,460
|
|
|
$
|
8,345
|
|
Funded Status
|
$
|
(5,013
|
)
|
|
$
|
(5,197
|
)
|
Amount Recognized in Consolidated Balance Sheets Consisted of:
|
|
|
|
|
|
||
Non-current asset
|
$
|
—
|
|
|
$
|
—
|
|
Current liability
|
—
|
|
|
—
|
|
||
Non-current liability
|
(5,013
|
)
|
|
(5,197
|
)
|
||
Net amount recognized
|
$
|
(5,013
|
)
|
|
$
|
(5,197
|
)
|
Weighted-average assumptions used to determine benefit obligations at December 31:
|
2017
|
|
2016
|
||
Discount rate
|
3.50
|
%
|
|
3.95
|
%
|
Weighted-average assumptions used to determine net periodic cost for years ended December 31:
|
2017
|
|
2016
|
|
2015
|
|||
Discount rate
|
3.95
|
%
|
|
4.15
|
%
|
|
3.80
|
%
|
Expected long-term return on plan assets
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
PBOP Benefits
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Components of net periodic benefit costs
|
|
|
|
|
|
||||||
Service cost
|
$
|
335
|
|
|
$
|
376
|
|
|
$
|
458
|
|
Interest cost
|
511
|
|
|
541
|
|
|
562
|
|
|||
Expected return on plan assets
|
(354
|
)
|
|
(341
|
)
|
|
(324
|
)
|
|||
Other
|
225
|
|
|
225
|
|
|
225
|
|
|||
Amortization of:
|
|
|
|
|
|
|
|
|
|||
Prior service credit
|
(181
|
)
|
|
(400
|
)
|
|
(571
|
)
|
|||
Recognized net loss
|
(78
|
)
|
|
39
|
|
|
388
|
|
|||
Net Periodic Post Retirement Benefit Costs
|
$
|
458
|
|
|
$
|
440
|
|
|
$
|
738
|
|
PBOP Benefits
(in thousands)
|
2017
|
|
2016
|
||||
Change in net gain
|
$
|
(664
|
)
|
|
$
|
(356
|
)
|
Amortization of prior service cost
|
181
|
|
|
400
|
|
||
Amortization of net loss
|
78
|
|
|
(39
|
)
|
||
Other regulatory amortization
|
(67
|
)
|
|
(236
|
)
|
||
Total recognized to Regulatory Liability
|
$
|
(472
|
)
|
|
$
|
(231
|
)
|
Amounts Recognized as a Regulatory Liability Asset at December 31:
(in thousands)
|
2017
|
|
2016
|
||||
Transition obligation
|
$
|
—
|
|
|
$
|
—
|
|
Prior service cost
|
(1
|
)
|
|
(182
|
)
|
||
Net loss
|
(1,116
|
)
|
|
(531
|
)
|
||
Other regulatory asset
|
186
|
|
|
254
|
|
||
Total Recognized as a Regulatory Liability
|
$
|
(931
|
)
|
|
$
|
(459
|
)
|
Estimated Benefit Cost Amortizations for the periods January 1 - December 31:
(in thousands)
|
2018
|
||
Amortization of transition obligation
|
$
|
—
|
|
Amortization of prior service credit
|
(1
|
)
|
|
Amortization of net loss
|
(20
|
)
|
|
Total Estimated Net Periodic Benefit Cost Amortizations
|
$
|
(21
|
)
|
Assumed health care cost trend rates at December 31:
|
2017
|
|
2016
|
||||||||
|
Medical
|
|
Dental
|
|
Medical
|
|
Dental
|
||||
Health care cost trend rate assumed for next year
(1)
|
8.25
|
%
|
|
8.25
|
%
|
|
8.25
|
%
|
|
8.25
|
%
|
Rate to which the cost trend rate is assumed to decline
|
4.75
|
%
|
|
4.75
|
%
|
|
4.75
|
%
|
|
4.75
|
%
|
Year that the rate reaches the ultimate trend rate
|
2025
|
|
|
2025
|
|
|
2024
|
|
|
2024
|
|
(in thousands)
|
1 Percentage-Point
|
||||||
|
Increase
|
|
Decrease
|
||||
Effect on total of service and interest cost components
|
$
|
44
|
|
|
$
|
(41
|
)
|
Effect on post-retirement benefit obligation
|
$
|
681
|
|
|
$
|
(634
|
)
|
|
2017
|
|
2016
|
||
Equity
|
69
|
%
|
|
64
|
%
|
Fixed Income
|
31
|
%
|
|
36
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
2017
|
|
|
|
|
|
||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Asset Type:
|
|
|
|
|
|
||||||
Money Market
|
$
|
139
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mutual Funds:
|
|
|
|
|
|
|
|
|
|||
Fixed Income Funds (1)
|
2,821
|
|
|
—
|
|
|
—
|
|
|||
Equity Funds (2)
|
6,500
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
9,460
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2016
|
|
|
|
|
|
||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Asset Type:
|
|
|
|
|
|
||||||
Money Market
|
$
|
222
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mutual Funds:
|
|
|
|
|
|
|
|
|
|||
Fixed Income Funds (1)
|
2,770
|
|
|
—
|
|
|
—
|
|
|||
Equity Funds (2)
|
5,353
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
8,345
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Mutual funds consisting primarily of fixed income securities.
|
(2)
|
Mutual funds consisting primarily of equity securities.
|
(in thousands)
|
|
||
2018
|
$
|
475
|
|
2019
|
545
|
|
|
2020
|
622
|
|
|
2021
|
693
|
|
|
2022
|
743
|
|
|
Years 2021 – 2025
|
4,688
|
|
|
2017
|
|
2016
|
||||||||||
|
Number of Shares
|
|
Grant Date Weighted Average Fair Value
|
|
Number of Shares
|
|
Grant Date Weighted Average Fair Value
|
||||||
Non-vested at beginning of year
|
35,142
|
|
|
$
|
37.66
|
|
|
39,997
|
|
|
$
|
34.59
|
|
Granted
|
9,719
|
|
|
53.73
|
|
|
21,110
|
|
|
39.70
|
|
||
Vested
|
(8,066
|
)
|
|
37.86
|
|
|
(19,077
|
)
|
|
34.16
|
|
||
Forfeited
|
(11,020
|
)
|
|
42.84
|
|
|
(6,888
|
)
|
|
35.81
|
|
||
Non-vested at end of year
|
25,775
|
|
|
$
|
41.44
|
|
|
35,142
|
|
|
$
|
37.66
|
|
(in thousands)
|
Revenues
|
|
Depreciation
|
|
Other Operating Expenses
|
|
Other Income (Deductions)
|
|
Interest Expense (net of AFUDC)
|
|
Income Taxes
|
|
Net Income (Loss)
|
||||||||||||||
For the year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Water Operations
|
$
|
108,525
|
|
|
$
|
16,684
|
|
|
$
|
59,068
|
|
|
$
|
(1,682
|
)
|
|
$
|
8,067
|
|
|
$
|
(830
|
)
|
|
$
|
23,854
|
|
Real Estate Transactions
|
212
|
|
|
—
|
|
|
157
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
33
|
|
|||||||
Services and Rentals
|
5,112
|
|
|
5
|
|
|
2,964
|
|
|
—
|
|
|
—
|
|
|
976
|
|
|
1,167
|
|
|||||||
Total
|
$
|
113,849
|
|
|
$
|
16,689
|
|
|
$
|
62,189
|
|
|
$
|
(1,682
|
)
|
|
$
|
8,067
|
|
|
$
|
168
|
|
|
$
|
25,054
|
|
For the year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Water Operations
|
$
|
100,001
|
|
|
$
|
13,905
|
|
|
$
|
54,100
|
|
|
$
|
(1,822
|
)
|
|
$
|
5,718
|
|
|
$
|
2,234
|
|
|
$
|
22,222
|
|
Real Estate Transactions
|
8
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
58
|
|
|
(54
|
)
|
|||||||
Services and Rentals
|
5,307
|
|
|
25
|
|
|
3,189
|
|
|
—
|
|
|
—
|
|
|
874
|
|
|
1,219
|
|
|||||||
Total
|
$
|
105,316
|
|
|
$
|
13,930
|
|
|
$
|
57,293
|
|
|
$
|
(1,822
|
)
|
|
$
|
5,718
|
|
|
$
|
3,166
|
|
|
$
|
23,387
|
|
For the year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Water Operations
|
$
|
97,472
|
|
|
$
|
12,871
|
|
|
$
|
57,474
|
|
|
$
|
(1,158
|
)
|
|
$
|
6,206
|
|
|
$
|
(1,255
|
)
|
|
$
|
21,018
|
|
Real Estate Transactions
|
14
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
(357
|
)
|
|
349
|
|
|||||||
Services and Rentals
|
5,602
|
|
|
3
|
|
|
3,362
|
|
|
—
|
|
|
—
|
|
|
843
|
|
|
1,394
|
|
|||||||
Total
|
$
|
103,088
|
|
|
$
|
12,874
|
|
|
$
|
60,858
|
|
|
$
|
(1,158
|
)
|
|
$
|
6,206
|
|
|
$
|
(769
|
)
|
|
$
|
22,761
|
|
in thousands):
|
2017
|
|
2016
|
||||
Total Plant and Other Investments:
|
|
|
|
||||
Water
|
$
|
707,362
|
|
|
$
|
609,508
|
|
Non-Water
|
1,023
|
|
|
959
|
|
||
Total Plant and Other Investments
|
708,385
|
|
|
610,467
|
|
||
Other Assets:
|
|
|
|
||||
Water
|
188,590
|
|
|
171,674
|
|
||
Non-Water
|
1,808
|
|
|
2,361
|
|
||
Total Other Assets
|
190,398
|
|
|
174,035
|
|
||
Total Assets
|
$
|
898,783
|
|
|
$
|
784,502
|
|
|
HVWC
|
|
Avon Water
|
||||
Net Utility Plant
|
$
|
28,861
|
|
|
$
|
28,330
|
|
Cash and Cash Equivalents
|
1,336
|
|
|
455
|
|
||
Accounts Receivable, net
|
355
|
|
|
379
|
|
||
Prepayments and Other Current Assets
|
179
|
|
|
243
|
|
||
Accrued Unbilled Revenues
|
47
|
|
|
467
|
|
||
Materials and Supplies, at Average Cost
|
63
|
|
|
151
|
|
||
Goodwill
|
12,777
|
|
|
23,812
|
|
||
Unrecovered Income Taxes - Regulatory Asset
|
—
|
|
|
3,619
|
|
||
Deferred Charges and Other Costs
|
343
|
|
|
799
|
|
||
Total Assets Acquired
|
$
|
43,961
|
|
|
$
|
58,255
|
|
|
|
|
|
||||
Long-Term Debt, including current portion
|
$
|
4,642
|
|
|
$
|
3,145
|
|
Accounts Payable and Accrued Expenses
|
149
|
|
|
584
|
|
||
Interim Bank Loans Payable
|
—
|
|
|
2,500
|
|
||
Other Current Liabilities
|
238
|
|
|
32
|
|
||
Advances for Construction
|
1,897
|
|
|
1,537
|
|
||
Deferred Federal and State Income Taxes
|
1,680
|
|
|
1,880
|
|
||
Unfunded Future Income Taxes
|
—
|
|
|
3,619
|
|
||
Other Long-Term Liabilities
|
—
|
|
|
314
|
|
||
Total Liabilities Assumed
|
$
|
8,606
|
|
|
$
|
13,611
|
|
|
|
|
|
||||
Contributions in Aid of Construction
|
18,452
|
|
|
11,560
|
|
||
|
|
|
|
||||
Net Assets Acquired
|
$
|
16,903
|
|
|
$
|
33,084
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Operating Revenues
|
$
|
109,715
|
|
|
$
|
107,309
|
|
|
$
|
103,617
|
|
Other Water Activities Revenues
|
1,554
|
|
|
1,498
|
|
|
1,583
|
|
|||
Real Estate Revenues
|
212
|
|
|
8
|
|
|
14
|
|
|||
Service and Rentals Revenues
|
5,121
|
|
|
5,417
|
|
|
5,680
|
|
|||
Total Revenues
|
$
|
116,602
|
|
|
$
|
114,232
|
|
|
$
|
110,894
|
|
|
|
|
|
|
|
||||||
Net Income
|
$
|
25,040
|
|
|
$
|
24,300
|
|
|
$
|
23,843
|
|
|
|
|
|
|
|
||||||
Basic Earnings per Average Share Outstanding
|
$
|
2.12
|
|
|
$
|
2.06
|
|
|
$
|
2.03
|
|
Diluted Earnings per Average Share Outstanding
|
$
|
2.08
|
|
|
$
|
2.02
|
|
|
$
|
2.00
|
|
Period ending December 31, 2017
|
|
||
Operating Revenues
|
$
|
5,802
|
|
Other Water Activities Revenues
|
74
|
|
|
Real Estate Revenues
|
—
|
|
|
Service and Rentals Revenues
|
28
|
|
|
Total Revenues
|
$
|
5,904
|
|
|
|
|
|
Net Income
|
$
|
1,519
|
|
|
|
|
|
Basic Earnings per Average Share Outstanding
|
$
|
0.13
|
|
Diluted Earnings per Average Share Outstanding
|
$
|
0.13
|
|
(in thousands)
|
|
|
||
2018
|
|
$
|
1,524
|
|
2019
|
|
$
|
1,567
|
|
2020
|
|
$
|
1,528
|
|
2021
|
|
$
|
1,476
|
|
2022
|
|
$
|
1,524
|
|
(in thousands, except for per share data)
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||
Operating Revenues
|
$
|
22,463
|
|
|
$
|
21,552
|
|
|
$
|
27,902
|
|
|
$
|
26,055
|
|
|
$
|
31,797
|
|
|
$
|
29,477
|
|
|
$
|
24,892
|
|
|
$
|
21,583
|
|
Total Utility Operating Income
|
5,285
|
|
|
4,178
|
|
|
10,629
|
|
|
11,217
|
|
|
12,588
|
|
|
10,939
|
|
|
5,727
|
|
|
2,615
|
|
||||||||
Net Income
|
4,068
|
|
|
3,148
|
|
|
8,418
|
|
|
9,943
|
|
|
10,716
|
|
|
9,535
|
|
|
1,852
|
|
|
761
|
|
||||||||
Basic Earnings per Common Share
|
0.36
|
|
|
0.29
|
|
|
0.75
|
|
|
0.90
|
|
|
0.92
|
|
|
0.86
|
|
|
0.14
|
|
|
0.07
|
|
||||||||
Diluted Earnings per Common Share
|
0.36
|
|
|
0.28
|
|
|
0.73
|
|
|
0.89
|
|
|
0.90
|
|
|
0.84
|
|
|
0.14
|
|
|
0.07
|
|
Exhibit
Number
|
Description
|
3.1
|
Amended and Restated Certificate of Incorporation of Connecticut Water Service, Inc. dated May 11, 1998 (Exhibit 3.1 to Form 10-K for year ended December 31, 1998).
|
3.2
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Connecticut Water Service, Inc. dated August 27, 1998 (Exhibit 3 to Form 8-K filed September 25, 1998).
|
3.3
|
|
3.4
|
|
3.5
|
Certification of Incorporation of The Connecticut Water Company effective April, 1998. (Exhibit 3.3 to Form 10-K for the year ended 12/31/98).
|
3.6*
|
|
4.1
|
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5
|
|
4.6
|
|
4.7
|
|
4.8
|
|
4.9
|
|
4.10
|
|
4.11
|
|
4.12
|
|
4.13
|
|
4.14
|
|
4.15
|
|
4.16
|
4.17
|
|
4.18
|
|
4.19
|
|
4.20
|
|
4.21
|
|
4.22
|
|
4.23
|
|
4.24
|
|
4.25
|
|
4.26
|
|
4.27
|
|
4.28
|
|
4.29
|
|
10.1
|
|
10.2
|
|
10.3
|
Trust Agreement for The Connecticut Water Company Welfare Benefits Plan (VEBA) dated January 1, 1989. (Exhibit 10.21 to Form 10-K for year ended 12/31/89).
|
10.4
|
|
10.5
|
|
10.6
|
10.7
|
|
10.8
|
|
10.9
|
|
10.10
|
10.11
|
a) Peter J. Bancroft
b) David C. Benoit
c) Maureen P. Westbrook
|
10.12
|
a) Kristen A. Johnson
|
10.13
|
|
10.14
|
|
10.15
|
|
10.16
|
|
10.17
|
a) Peter J. Bancroft
b) David C. Benoit
c) Kristen A. Johnson
d) Maureen P. Westbrook
|
10.18
|
a) Peter J. Bancroft
b) David C. Benoit
c) Kristen A. Johnson
d) Maureen P. Westbrook
|
10.19
|
|
10.20
|
a) David C. Benoit
b) Maureen P. Westbrook
c) Kristen A. Johnson
|
10.21
|
|
10.22
|
|
10.23
|
|
10.24
|
|
10.25
|
|
10.26
|
|
10.27
|
|
10.28
|
|
10.29
|
|
10.30
|
|
10.31
|
10.32
|
|
10.33
|
|
10.34
|
|
10.35
|
|
10.36
|
|
10.37
|
|
10.38
|
|
10.39
|
|
10.40
|
|
10.41
|
|
10.42
|
|
10.43
|
|
10.44
|
|
10.45
|
|
10.46
|
|
10.47
|
|
10.48
|
|
10.49
|
|
10.50
|
|
10.51
|
|
10.52
|
|
10.53
|
|
10.54
|
|
10.52
|
|
10.56
|
|
10.57
|
|
10.58
|
10.59
|
|
10.60
|
|
10.61
|
|
10.62
|
|
10.63
|
|
10.64
|
|
10.65
|
|
21*
|
|
23*
|
|
31.1*
|
|
31.2*
|
|
32.1**
|
|
32.1**
|
|
101.INS**
|
XBRL Instance Document
|
101.SCH**
|
XBRL Taxonomy Extension Schema
|
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase
|
Note:
|
Exhibits 10.1 through 10.27, 10.64 and 10.65 set forth each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.
|
|
CONNECTICUT WATER SERVICE, INC.
Registrant
|
March 15, 2018
|
By
/s/ David C. Benoit
David C. Benoit
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
/s/ David C. Benoit
David C. Benoit
|
|
President and Chief Executive Officer (Principal Executive Officer)
|
|
March 15, 2018
|
/s/ Robert J. Doffek
Robert J. Doffek
|
|
Chief Financial Officer, Treasurer and Controller (Principal Financial Officer and Principal Accounting Officer)
|
|
March 15, 2018
|
Signature
|
|
Title
|
|
Date
|
/s/ Richard H. Forde
Richard H. Forde
|
|
Director
|
|
March 14, 2018
|
/s/ Mary Ann Hanley
Mary Ann Hanley
|
|
Director
|
|
March 14, 2018
|
/s/ Heather Hunt
Heather Hunt
|
|
Director
|
|
March 14, 2018
|
/s/ Bradford A. Hunter
Bradford A. Hunter
|
|
Director
|
|
March 14, 2018
|
/s/ Lisa J. Thibdaue
Lisa J. Thibdaue
|
|
Director
|
|
March 14, 2018
|
/s/ Carol P. Wallace
Carol P. Wallace
|
|
Director
|
|
March 14, 2018
|
/s/ Ellen C. Wolf
Ellen C. Wolf
|
|
Director
|
|
March 14, 2018
|
|
|
|
|
|
Description
|
Balance Beginning of Year
|
|
Beginning Balance Adjustments
(1)
|
|
Additions Charged to Income
|
|
Deductions from Reserves
(2)
|
|
Balance End of Year
|
||||||||||
Allowance for Uncollectible Accounts
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31, 2017
|
$
|
1,100
|
|
|
$
|
16
|
|
|
$
|
495
|
|
|
$
|
346
|
|
|
$
|
1,265
|
|
Year Ended December 31, 2016
|
$
|
947
|
|
|
$
|
—
|
|
|
$
|
558
|
|
|
$
|
405
|
|
|
$
|
1,100
|
|
Year Ended December 31, 2015
|
$
|
1,202
|
|
|
$
|
—
|
|
|
$
|
158
|
|
|
$
|
413
|
|
|
$
|
947
|
|
Name
|
State of Incorporation
|
Registrant:
|
|
Connecticut Water Service, Inc.
|
Connecticut
|
Subsidiaries:
|
|
The Connecticut Water Company
|
Connecticut
|
Chester Realty, Inc.
|
Connecticut
|
New England Water Utility Services, Inc.
|
Connecticut
|
The Maine Water Company
|
Maine
|
The Heritage Village Water Company
|
Connecticut
|
The Avon Water Company
|
Connecticut
|
1.
|
I have reviewed this annual report on Form 10-K of Connecticut Water Service, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
d.
|
Disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
|
1.
|
I have reviewed this annual report on Form 10-K of Connecticut Water Service, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
|
d.
|
Disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
|