0000108985-19-000097.txt : 20190802 0000108985-19-000097.hdr.sgml : 20190802 20190802105936 ACCESSION NUMBER: 0000108985-19-000097 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 56 CONFORMED PERIOD OF REPORT: 20190630 FILED AS OF DATE: 20190802 DATE AS OF CHANGE: 20190802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: YORK WATER CO CENTRAL INDEX KEY: 0000108985 STANDARD INDUSTRIAL CLASSIFICATION: WATER SUPPLY [4941] IRS NUMBER: 231242500 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-34245 FILM NUMBER: 19994825 BUSINESS ADDRESS: STREET 1: 130 E MARKET ST CITY: YORK STATE: PA ZIP: 17401-1219 BUSINESS PHONE: 7178453601 MAIL ADDRESS: STREET 1: 130 EAST MARKET STREET CITY: YORK STATE: PA ZIP: 17401-1219 10-Q 1 form10q.htm THE YORK WATER COMPANY 10-Q 06-30-19  


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from __________to____________

Commission file number 001-34245

THE YORK WATER COMPANY
(Exact name of registrant as specified in its charter)


PENNSYLVANIA
23-1242500
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
130 EAST MARKET STREET, YORK, PENNSYLVANIA
17401
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number, including area code (717) 845-3601

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES
NO
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
⌧ YES
NO
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer
Accelerated filer ⌧
Non-accelerated filer
     
Small Reporting company ⌧
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES
⌧ NO
Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, NO PAR VALUE
YORW
The NASDAQ Global Select Market
(Title of Class)
(Trading Symbol)
(Name of Each Exchange on Which Registered)

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common stock, No par value
12,975,573 Shares outstanding
as of August 2, 2019



THE YORK WATER COMPANY

PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements.

THE YORK WATER COMPANY

Balance Sheets (Unaudited)
(In thousands of dollars, except per share amounts)

 
 
Jun. 30, 2019
   
Dec. 31, 2018
 
ASSETS
           
UTILITY PLANT, at original cost
 
$
389,690
   
$
380,784
 
Plant acquisition adjustments
   
(3,079
)
   
(3,108
)
Accumulated depreciation
   
(81,595
)
   
(78,519
)
Net utility plant
   
305,016
     
299,157
 
 
               
OTHER PHYSICAL PROPERTY, net of accumulated depreciation
of $422 in 2019 and $410 in 2018
   
702
     
714
 
 
               
CURRENT ASSETS:
               
Cash and cash equivalents
   
2
     
2
 
Accounts receivable, net of reserves of $343 in 2019
and $305 in 2018
   
4,475
     
4,811
 
Unbilled revenues
   
2,274
     
2,427
 
Recoverable income taxes
   
156
     
-
 
Materials and supplies inventories, at cost
   
981
     
876
 
Prepaid expenses
   
1,421
     
895
 
Total current assets
   
9,309
     
9,011
 
 
               
OTHER LONG-TERM ASSETS:
               
Note receivable
   
255
     
255
 
Deferred regulatory assets
   
32,660
     
32,353
 
Other assets
   
3,909
     
3,650
 
Total other long-term assets
   
36,824
     
36,258
 
 
               
Total Assets
 
$
351,851
   
$
345,140
 

The accompanying notes are an integral part of these statements.

THE YORK WATER COMPANY

Balance Sheets (Unaudited)
(In thousands of dollars, except per share amounts)

 
 
Jun. 30, 2019
   
Dec. 31, 2018
 
 
           
STOCKHOLDERS' EQUITY AND LIABILITIES
           
COMMON STOCKHOLDERS' EQUITY:
           
Common stock, no par value, authorized 46,500,000 shares,
issued and outstanding 12,974,287 shares in 2019
and 12,943,536 shares in 2018
 
$
82,183
   
$
81,305
 
Retained earnings
   
46,931
     
44,890
 
Total common stockholders' equity
   
129,114
     
126,195
 
 
               
PREFERRED STOCK, authorized 500,000 shares, no shares issued
   
     
 
 
               
LONG-TERM DEBT, excluding current portion
   
96,085
     
93,328
 
 
               
COMMITMENTS
   
     
 
 
               
CURRENT LIABILITIES:
               
Short-term borrowings
   
     
1,000
 
Current portion of long-term debt
   
7
     
30
 
Accounts payable
   
4,191
     
3,030
 
Dividends payable
   
2,006
     
1,999
 
Accrued compensation and benefits
   
1,108
     
1,191
 
Accrued income taxes
   
     
150
 
Accrued interest
   
916
     
992
 
Deferred regulatory liabilities
   
1,698
     
2,104
 
Other accrued expenses
   
280
     
345
 
Total current liabilities
   
10,206
     
10,841
 
 
               
DEFERRED CREDITS:
               
Customers' advances for construction
   
7,934
     
6,849
 
Deferred income taxes
   
37,747
     
36,962
 
Deferred employee benefits
   
3,875
     
4,715
 
Deferred regulatory liabilities
   
24,939
     
24,710
 
Other deferred credits
   
2,200
     
1,815
 
Total deferred credits
   
76,695
     
75,051
 
 
               
Contributions in aid of construction
   
39,751
     
39,725
 
 
               
Total Stockholders' Equity and Liabilities
 
$
351,851
   
$
345,140
 

The accompanying notes are an integral part of these statements.

THE YORK WATER COMPANY

Statements of Income (Unaudited)
(In thousands of dollars, except per share amounts)

 
 
Three Months
Ended June 30
   
Six Months
Ended June 30
 
 
 
2019
   
2018
   
2019
   
2018
 
 
OPERATING REVENUES
 
$
13,048
   
$
12,026
   
$
24,879
   
$
23,670
 
 
                               
OPERATING EXPENSES:
                               
Operation and maintenance
   
2,646
     
2,563
     
5,053
     
4,917
 
Administrative and general
   
2,103
     
2,254
     
4,009
     
4,249
 
Depreciation and amortization
   
1,933
     
1,624
     
3,824
     
3,465
 
Taxes other than income taxes
   
292
     
267
     
633
     
581
 
 
   
6,974
     
6,708
     
13,519
     
13,212
 
 
                               
Operating income
   
6,074
     
5,318
     
11,360
     
10,458
 
 
                               
OTHER INCOME (EXPENSES):
                               
Interest on debt
   
(1,296
)
   
(1,376
)
   
(2,623
)
   
(2,740
)
Allowance for funds used during construction
   
87
     
31
     
156
     
123
 
Other pension costs
   
(363
)
   
(321
)
   
(726
)
   
(642
)
Other income (expenses), net
   
(121
)
   
(77
)
   
(272
)
   
(159
)
 
   
(1,693
)
   
(1,743
)
   
(3,465
)
   
(3,418
)
 
                               
Income before income taxes
   
4,381
     
3,575
     
7,895
     
7,040
 
 
                               
Income taxes
   
664
     
270
     
1,365
     
1,141
 
 
                               
Net Income
 
$
3,717
   
$
3,305
   
$
6,530
   
$
5,899
 
 
                               
Basic Earnings Per Share
 
$
0.28
   
$
0.26
   
$
0.50
   
$
0.46
 
 
                               
Diluted Earnings Per Share
 
$
0.28
   
$
0.26
   
$
0.50
   
$
0.46
 
                                 
Cash Dividends Declared Per Share
 
$
0.1733
   
$
0.1666
   
$
0.3466
   
$
0.3332
 

The accompanying notes are an integral part of these statements.

THE YORK WATER COMPANY

Statements of Common Stockholders' Equity (Unaudited)
(In thousands of dollars, except per share amounts)
For the Periods Ended June 30, 2019 and 2018

 
 
Common
Stock
Shares
   
Common
Stock
Amount
   
Retained
Earnings
   
Total
 
 
Balance, March 31, 2019
   
12,954,976
   
$
81,703
   
$
45,460
   
$
127,163
 
Net income
   
     
     
3,717
     
3,717
 
Dividends
   
     
     
(2,246
)
   
(2,246
)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans
   
12,348
     
415
     
     
415
 
Stock-based compensation
   
6,963
     
65
     
     
65
 
Balance, June 30, 2019
   
12,974,287
   
$
82,183
   
$
46,931
   
$
129,114
 

 
Balance, December 31, 2018
   
12,943,536
   
$
81,305
   
$
44,890
   
$
126,195
 
Net income
   
     
     
6,530
     
6,530
 
Dividends
   
     
     
(4,489
)
   
(4,489
)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans
   
23,788
     
799
     
     
799
 
Stock-based compensation
   
6,963
     
79
     
     
79
 
Balance, June 30, 2019
   
12,974,287
   
$
82,183
   
$
46,931
   
$
129,114
 

 
 
Common
Stock
Shares
   
Common
Stock
Amount
   
Retained
Earnings
   
Total
 
 
Balance, March 31, 2018
   
12,892,798
   
$
79,796
   
$
40,652
   
$
120,448
 
Net income
   
     
     
3,305
     
3,305
 
Dividends
   
     
     
(2,150
)
   
(2,150
)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans
   
17,726
     
555
     
     
555
 
Stock-based compensation
   
3,743
     
53
     
     
53
 
Balance, June 30, 2018
   
12,914,267
   
$
80,404
   
$
41,807
   
$
122,211
 
                                 
 
Balance, December 31, 2017
   
12,872,742
   
$
79,201
   
$
40,204
   
$
119,405
 
Net income
   
     
     
5,899
     
5,899
 
Dividends
   
     
     
(4,296
)
   
(4,296
)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans
   
37,782
     
1,146
     
     
1,146
 
Stock-based compensation
   
3,743
     
57
     
     
57
 
Balance, June 30, 2018
   
12,914,267
   
$
80,404
   
$
41,807
   
$
122,211
 

The accompanying notes are an integral part of these statements.

THE YORK WATER COMPANY

Statements of Cash Flows (Unaudited)
(In thousands of dollars, except per share amounts)

 
 
Six Months
Ended June 30
 
 
 
2019
   
2018
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
 
$
6,530
   
$
5,899
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
   
3,824
     
3,465
 
Stock-based compensation
   
79
     
57
 
Increase in deferred income taxes
   
85
     
90
 
Other
   
158
     
171
 
Changes in assets and liabilities:
               
Decrease in accounts receivable and unbilled revenues
   
336
     
15
 
Increase in recoverable income taxes
   
(156
)
   
(375
)
Increase in materials and supplies, prepaid expenses, regulatory and other assets
   
(2,796
)
   
(2,895
)
Increase in accounts payable, accrued compensation and benefits,
accrued expenses, deferred employee benefits, regulatory liabilities, and other deferred credits
   
736
     
2,635
 
Decrease in accrued interest and taxes
   
(226
)
   
(531
)
Net cash provided by operating activities
   
8,570
     
8,531
 
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Utility plant additions, including debt portion of allowance for funds used during
construction of $87 in 2019 and $69 in 2018
   
(8,018
)
   
(6,606
)
Cash received from surrender of life insurance policies
   
     
108
 
Net cash used in investing activities
   
(8,018
)
   
(6,498
)
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Customers' advances for construction and contributions in aid of construction
   
1,226
     
625
 
Repayments of customer advances
   
(115
)
   
(202
)
Proceeds of long-term debt issues
   
33,722
     
12,544
 
Debt issuance costs
   
(180
)
   
-
 
Repayments of long-term debt
   
(30,882
)
   
(11,721
)
Repayments under short-term line of credit agreements
   
(1,000
)
   
 
Changes in cash overdraft position
   
360
     
(143
)
Issuance of common stock
   
799
     
1,146
 
Dividends paid
   
(4,482
)
   
(4,282
)
Net cash used in financing activities
   
(552
)
   
(2,033
)
 
               
Net change in cash and cash equivalents
   
     
 
Cash and cash equivalents at beginning of period
   
2
     
2
 
Cash and cash equivalents at end of period
 
$
2
   
$
2
 
 
               
Supplemental disclosures of cash flow information:
               
Cash paid during the period for:
               
Interest, net of amounts capitalized
 
$
2,544
   
$
2,601
 
Income taxes
   
1,449
     
1,647
 
 
               
Supplemental disclosure of non-cash investing and financing activities:
 
Accounts payable includes $1,587 in 2019 and $1,624 in 2018 for the construction of utility plant.
         

The accompanying notes are an integral part of these statements.

THE YORK WATER COMPANY
 
Notes to Interim Financial Statements
(In thousands of dollars, except per share amounts)
 
1.  Basis of Presentation
 
The interim financial statements are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of results for such periods.  Because the financial statements cover an interim period, they do not include all disclosures and notes normally provided in annual financial statements, and therefore, should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
 
Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

2.  Accounts Receivable and Contract Assets

Accounts receivable and contract assets are summarized in the following table:

   
As of
Jun. 30, 2019
   
As of
Dec. 31, 2018
   
Change
 
 
Accounts receivable – customers
 
$
4,632
   
$
4,731
   
$
(99
)
Other receivables
   
186
     
385
     
(199
)
     
4,818
     
5,116
     
(298
)
Less: allowance for doubtful accounts
   
(343
)
   
(305
)
   
(38
)
Accounts receivable, net
 
$
4,475
   
$
4,811
   
$
(336
)
                         
Unbilled revenue
 
$
2,274
   
$
2,427
   
$
(153
)

Differences in timing of revenue recognition, billings, and cash collections result in receivables and contract assets.  Generally, billing occurs subsequent to revenue recognition, resulting in a contract asset reported as unbilled revenue on the balance sheet.  The Company does not receive advances or deposits from customers before revenue is recognized so no contract liabilities are reported.  Accounts receivable are recorded when the right to consideration becomes unconditional and are presented separately on the balance sheet.  The changes in accounts receivable – customers and in unbilled revenue were primarily due to normal timing difference between performance and the customer’s payments.

3.  Common Stock and Earnings Per Share

Net income of $3,717 and $3,305 for the three months ended June 30, 2019 and 2018, respectively, and $6,530 and $5,899 for the six months ended June 30, 2019 and 2018, respectively, is used to calculate both basic and diluted earnings per share.  Basic earnings per share is based on the weighted average number of common shares outstanding.  Diluted earnings per share is based on the weighted average number of common shares outstanding plus potentially dilutive shares.  The dilutive effect of employee stock-based compensation is included in the computation of diluted earnings per share and is calculated using the treasury stock method and expected proceeds upon exercise or issuance of the stock-based compensation.

The following table summarizes the shares used in computing basic and diluted earnings per share:

   
Three Months
Ended June 30
   
Six Months
Ended June 30
 
   
2019
   
2018
   
2019
   
2018
 
                         
Weighted average common shares, basic
   
12,955,656
     
12,895,687
     
12,949,036
     
12,886,154
 
Effect of dilutive securities:
                               
Employee stock-based compensation
   
510
     
62
     
355
     
52
 
Weighted average common shares, diluted
   
12,956,166
     
12,895,749
     
12,949,391
     
12,886,206
 

On March 11, 2013, the Board of Directors, or the Board, authorized a share repurchase program granting the Company authority to repurchase up to 1,200,000 shares of the Company's common stock from time to time.  The stock repurchase program has no specific end date and the Company may repurchase shares in the open market or through privately negotiated transactions.  The Company may suspend or discontinue the repurchase program at any time.  No shares were repurchased during the three or six months ended June 30, 2019 and 2018.  As of June 30, 2019, 618,004 shares remain authorized for repurchase.

4.  Debt

 
 
As of
Jun. 30, 2019
   
As of
Dec. 31, 2018
 
             
10.17% Senior Notes, Series A, due 2019
 
$
   
$
6,000
 
9.60% Senior Notes, Series B, due 2019
   
     
5,000
 
1.00% Pennvest Note, due 2019
   
7
     
30
 
10.05% Senior Notes, Series C, due 2020
   
6,500
     
6,500
 
8.43% Senior Notes, Series D, due 2022
   
7,500
     
7,500
 
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029
   
12,000
     
12,000
 
4.75% York County Industrial Development Authority Revenue Bonds, Series 2006, due 2036
   
10,500
     
10,500
 
4.50% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038
   
14,870
     
14,870
 
5.00% Monthly Senior Notes, Series 2010A, due 2040
   
15,000
     
15,000
 
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045
   
10,000
     
10,000
 
4.54% Senior Notes, due 2049
   
20,000
     
 
Committed Lines of Credit, due 2021
   
2,368
     
8,508
 
Total long-term debt
   
98,745
     
95,908
 
Less discount on issuance of long-term debt
   
(198
)
   
(204
)
Less unamortized debt issuance costs
   
(2,455
)
   
(2,346
)
Less current maturities
   
(7
)
   
(30
)
Long-term portion
 
$
96,085
   
$
93,328
 

On January 31, 2019, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $20,000 aggregate principal amount of the Company’s senior notes.  The senior notes bear interest at 4.54% per annum payable semiannually and mature on January 31, 2049.  The senior notes are unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting issuance costs, of approximately $19,820.  The net proceeds were used to refinance the $11,000 aggregate principal amount of the Company’s 10.17% Series A Senior Notes due February 1, 2019 and the 9.60% Series B Senior Notes due February 1, 2019, and to refinance line of credit borrowings incurred by the Company as interim financing for various capital projects of the Company.

In the second quarter of 2019, the Company renewed its $13,000 and $11,000 committed lines of credit and extended the maturity date of each to May 2021, and it renewed its $7,500 committed line of credit and extended the maturity date to June 2021.

5.  Interest Rate Swap Agreement

The Company is exposed to certain risks relating to its ongoing business operations.  The primary risk managed by using derivative instruments is interest rate risk.  The Company utilizes an interest rate swap agreement to effectively convert the Company's $12,000 variable-rate debt issue to a fixed rate.  Interest rate swaps are contracts in which a series of interest rate cash flows are exchanged over a prescribed period.  The notional amount on which the interest payments are based ($12,000) is not exchanged.  The interest rate swap provides that the Company pays the counterparty a fixed interest rate of 3.16% on the notional amount of $12,000.  In exchange, the counterparty pays the Company a variable interest rate based on 59% of the U.S. Dollar one-month LIBOR rate on the notional amount.  The intent is for the variable rate received from the swap counterparty to approximate the variable rate the Company pays to bondholders on its variable rate debt issue, resulting in a fixed rate being paid to the swap counterparty and reducing the Company's interest rate risk.  The Company’s net payment rate on the swap was 1.71% and 1.97% during the three months ended June 30, 2019 and 2018, respectively, and 1.68% and 2.08% for the six months ended June 30, 2019 and 2018, respectively.
 
The interest rate swap agreement is classified as a financial derivative used for non-trading activities.  The accounting standards regarding accounting for derivatives and hedging activities require companies to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet.  In accordance with the standards, the interest rate swap is recorded on the balance sheet in other deferred credits at fair value (see Note 6).

The Company uses regulatory accounting treatment rather than hedge accounting to defer the unrealized gains and losses on its interest rate swap.  These unrealized gains and losses are recorded as a regulatory asset.  Based on current ratemaking treatment, the Company expects the unrealized gains and losses to be recognized in rates as a component of interest expense as the swap settlements occur.  Swap settlements are recorded in the income statement with the hedged item as interest expense.  Swap settlements resulted in the reclassification from regulatory assets to interest expense of $51 and $60 during the three months ended June 30, 2019 and 2018, respectively, and $101 and $125 during the six months ended June 30, 2019 and 2018, respectively. The overall swap result was a (gain) loss of $242 and $(90) for the three months ended June 30, 2019 and 2018, respectively, and $486 and $(347) for the six months ended June 30, 2019 and 2018, respectively. The Company expects to reclassify $252 from regulatory assets to interest expense as a result of swap settlements over the next 12 months.
 
The interest rate swap agreement contains provisions that require the Company to maintain a credit rating of at least BBB- with Standard & Poor's.  If the Company's rating were to fall below this rating, it would be in violation of these provisions, and the counterparty to the derivative could request immediate payment if the derivative was in a liability position.  On April 5, 2019, Standard & Poor's affirmed the Company's credit rating at A-, with a stable outlook and adequate liquidity.  The Company's interest rate swap was in a liability position as of June 30, 2019.  If a violation due to credit rating, or some other default provision, were triggered on June 30, 2019, the Company would have been required to pay the counterparty approximately $2,351.
 
The interest rate swap will expire on October 1, 2029.  Other than the interest rate swap, the Company has no other derivative instruments.
 
6.  Fair Value Measurements
 
The accounting standards regarding fair value measurements establish a fair value hierarchy which indicates the extent to which inputs used in measuring fair value are observable in the market.  Level 1 inputs include quoted prices for identical instruments and are the most observable.  Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, commodity rates and yield curves.  Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability.

The Company has recorded its interest rate swap liability at fair value in accordance with the standards.  The liability is recorded under the caption “Other deferred credits” on the balance sheet.  The table below illustrates the fair value of the interest rate swap as of the end of the reporting period.
 
Description
 
June 30, 2019
 
Fair Value Measurements
at Reporting Date Using
Significant Other Observable Inputs (Level 2)
Interest Rate Swap
 
$2,200
 
$2,200
 
Fair values are measured as the present value of all expected future cash flows based on the LIBOR-based swap yield curve as of the date of the valuation.  These inputs to this calculation are deemed to be Level 2 inputs.  The balance sheet carrying value reflects the Company's credit quality as of June 30, 2019.  The rate used in discounting all prospective cash flows anticipated to be made under this swap reflects a representation of the yield to maturity for 30-year debt on utilities rated A- as of June 30, 2019.  The use of the Company's credit rating resulted in a reduction in the fair value of the swap liability of $151 as of June 30, 2019.  The fair value of the swap reflecting the Company's credit quality as of December 31, 2018 is shown in the table below.
 
Description
 
December 31, 2018
 
Fair Value Measurements
at Reporting Date Using
Significant Other Observable Inputs (Level 2)
Interest Rate Swap
 
$1,815
 
$1,815
 
The carrying amount of current assets and liabilities that are considered financial instruments approximates fair value as of the dates presented.  The Company's total long-term debt, with a carrying value of $98,745 at June 30, 2019, and $95,908 at December 31, 2018, had an estimated fair value of approximately $116,000 and $105,000, respectively.  The estimated fair value of debt was calculated using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration and risk profile.  These inputs to this calculation are deemed to be Level 2 inputs.  The Company recognized its credit rating in determining the yield curve, and did not factor in third party credit enhancements including bond insurance on the 2006 York County Industrial Development Authority issue and the letter of credit on the 2008 Pennsylvania Economic Development Financing Authority Series A issue.

Customers' advances for construction and note receivable had carrying values at June 30, 2019 of $7,934 and $255, respectively.  At December 31, 2018, customers' advances for construction and note receivable had carrying values of $6,849 and $255, respectively.  The relative fair values of these amounts cannot be accurately estimated since the timing of future payment streams is dependent upon several factors, including new customer connections, customer consumption levels and future rate increases.

7.  Commitments

The Company entered into a consent order agreement with the Pennsylvania Department of Environmental Protection in December 2016 after the Company determined it exceeded the action level for lead as established by the Lead and Copper Rule, or LCR, issued by the U.S. Environmental Protection Agency.  The Company did not have an exceedance in any subsequent compliance test.  Under the agreement, the Company committed to exceed the LCR replacement schedule by replacing all of the remaining known company-owned lead service lines within four years from the agreement.  The cost for these service line replacements was approximately $2,466 and $2,341 through June 30, 2019 and December 31, 2018, respectively, and is included in utility plant.  As of June 30, 2019, all known company-owned lead service lines have been replaced.  Any additional company-owned lead service lines that are discovered will be replaced but are not expected to have a material impact on the financial position of the Company.

The Company was granted approval by the Pennsylvania Public Utility Commission, or PPUC, to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the agreement.  The tariff modification allows the Company to replace customer-owned service lines at its own initial cost.  The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period.  The cost for the customer-owned lead service line replacements was approximately $474 and $304 through June 30, 2019 and December 31, 2018, respectively, and is included as a regulatory asset.  Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $910.  This estimate is subject to adjustment as more facts become available.

8.  Revenue

The following table shows the Company’s revenues disaggregated by service and customer type.

 
 
Three Months
Ended June 30
   
Six Months
Ended June 30
 
 
 
2019
   
2018
   
2019
   
2018
 
Water utility service
                       
Residential
 
$
8,142
   
$
7,453
   
$
15,600
   
$
14,771
 
Commercial and industrial
   
3,603
     
3,361
     
6,766
     
6,495
 
Fire protection
   
776
     
721
     
1,510
     
1,434
 
Wastewater utility service
                               
Residential
   
291
     
263
     
544
     
510
 
Commercial and industrial
   
71
     
64
     
131
     
125
 
Billing and revenue collection services
   
19
     
16
     
37
     
32
 
Collection services
   
15
     
14
     
32
     
32
 
Other revenue
   
4
     
4
     
7
     
12
 
Total Revenue from Contracts with Customers
   
12,921
     
11,896
     
24,627
     
23,411
 
Rents from regulated property
   
127
     
130
     
252
     
259
 
Total Operating Revenue
 
$
13,048
   
$
12,026
   
$
24,879
   
$
23,670
 

Utility Service
The Company provides utility service as a distinct and single performance obligation to each of its water and wastewater customers.  The transaction price is detailed in the tariff pursuant to an order by the PPUC and made publicly available.  There is no variable consideration and no free service, special rates, or subnormal charges to any customer.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of utility service through a stand-ready obligation to perform and the transfer of water or the collection of wastewater through a series of distinct transactions that are identical in nature and have the same pattern of transfer to the customer.  The Company uses an output method to recognize the utility service revenue over time.  The stand-ready obligation is recognized through the passage of time in the form of a fixed charge and the transfer of water or the collection of wastewater is recognized at a per unit rate based on the actual or estimated flow through the meter.  Each customer is invoiced every month and the invoice is due within twenty days.  The utility service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for the passage of time and the actual or estimated usage from the latest meter reading to the end of the accounting period.  The methodology is standardized and consistently applied to reduce bias and the need for judgment.

Billing and Revenue Collection Service
The Company provides billing and revenue collection service as distinct performance obligations to four municipalities within the service territory of the Company.  The municipalities provide wastewater service to their residents and the Company acts as the billing and revenue collection agent for the municipalities.  The transaction price is a fixed amount per bill prepared as established in the contract.  There is no variable consideration.  Due to the fact that both the billing performance obligation and the revenue collection performance obligation are materially complete by the end of the reporting period, the Company does not allocate the transaction price between the two performance obligations.  The performance obligations are satisfied at a point in time when the bills are sent as the municipalities receive all the benefits and bears all of the risk of non-collection at that time.  Each municipality is invoiced when the bills are complete and the invoice is due within thirty days.  The billing and revenue collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.

Collection Service
The Company provides collection service as a distinct and single performance obligation to several municipalities within the service territory of the Company.  The municipalities provide wastewater service to their residents.  If those residents are delinquent in paying for their wastewater service, the municipalities request that the Company post for and shut off the supply of water to the premises of those residents.  When the resident is no longer delinquent, the Company will restore water service to the premises.  The transaction price for each posting, each shut off, and each restoration is a fixed amount as established in the contract.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied at a point in time when the posting, shut off, or restoration is completed as the municipalities receive all the benefits in the form of payment or no longer providing wastewater service.  Each municipality is invoiced periodically for the posting, shut offs, and restorations that have been completed since the last billing and the invoice is due within thirty days.  The collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for postings, shut offs, and restorations that have been completed from the last billing to the end of the accounting period.

Service Line Protection Plan
The Company provides service line protection as a distinct and single performance obligation to current water customers that choose to participate.  The transaction price is detailed in the plan’s terms and conditions and made publicly available.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of service line protection through a stand-ready obligation to perform.  The Company uses an output method to recognize the service line protection revenue over time.  The stand-ready obligation is recognized through the passage of time.  A customer has a choice to prepay for an entire year or to pay in advance each month.  The service line protection plan has no returns or extended warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no material performance obligations remain unsatisfied as of the end of the reporting period.

9.  Rate Matters
 
From time to time, the Company files applications for rate increases with the PPUC and is granted rate relief as a result of such requests.  The most recent rate request was filed by the Company on May 30, 2018, and sought an annual increase in water rates of $6,399 and an annual increase in wastewater rates of $289.  Effective March 1, 2019, the PPUC authorized an increase in water rates designed to produce approximately $3,361 in additional annual revenues and an increase in wastewater rates designed to produce approximately $289 in additional annual revenues.

As part of a rate order approved by the PPUC, the Company has agreed to return $2,117 to customers as a reconcilable negative surcharge on their bills generated from March 2019 through February 2020 for the benefit of the lower tax rate effective January 1, 2018 resulting from the enactment of the Tax Cuts and Jobs Act of 2017, or 2017 Tax Act.  During the three and six months ended June 30, 2019, the Company increased its regulatory liability by reducing revenue by $21 and $305, respectively, including the gross-up of revenue necessary to return, in rates, the effect of this temporary tax difference, and reclassified $0 and $27, respectively, from excess accumulated deferred income taxes on accelerated depreciation recorded at December 31, 2017.  During the three and six months ended June 30, 2019 and 2018, the Company returned negative surcharges of $541 and $798, respectively.

The PPUC permits water utilities to collect a distribution system improvement charge, or DSIC.  The DSIC allows the Company to add a charge to customers' bills for qualified replacement costs of certain infrastructure without submitting a rate filing.  This surcharge mechanism typically adjusts periodically based on additional qualified capital expenditures completed or anticipated in a future period.  The DSIC is capped at 5% of base rates, and is reset to zero when new base rates that reflect the costs of those additions become effective or when a utility's earnings exceed a regulatory benchmark. The DSIC reset to zero when the new base rates took effect March 1, 2019. The DSIC provided revenues of $0 and $436 for the three months ended June 30, 2019 and 2018, respectively, and $249 and $916 for the six months ended June 30, 2019 and 2018, respectively.

10.  Pensions
 
Components of Net Periodic Pension Cost

 
 
Three Months
Ended June 30
   
Six Months
Ended June 30
 
 
 
2019
   
2018
   
2019
   
2018
 
 
                       
Service cost
 
$
212
   
$
254
   
$
424
   
$
508
 
Interest cost
   
411
     
379
     
822
     
758
 
Expected return on plan assets
   
(683
)
   
(698
)
   
(1,366
)
   
(1,396
)
Amortization of actuarial loss
   
105
     
102
     
210
     
203
 
Amortization of prior service cost
   
(3
)
   
(4
)
   
(6
)
   
(7
)
Rate-regulated adjustment
   
533
     
542
     
1,066
     
1,084
 
Net periodic pension expense
 
$
575
   
$
575
   
$
1,150
   
$
1,150
 

Pension service cost is recorded in operating expenses.  All other components of net periodic pension cost are recorded as other pension costs in other income (expenses).

Employer Contributions
 
The Company previously disclosed in its financial statements for the year ended December 31, 2018 that it expected to contribute $2,300 to its pension plans in 2019.  For the six months ended June 30, 2019, contributions of $1,150 have been made.  The Company expects to contribute the remaining $1,150 during the final two quarters of 2019.

11.  Stock-Based Compensation

On May 2, 2016, the Company’s stockholders approved The York Water Company Long-Term Incentive Plan, or LTIP.  The LTIP was adopted to provide the incentive of long-term stock-based awards to officers, directors and key employees. The LTIP provides for the granting of nonqualified stock options, incentive stock options, stock appreciation rights, performance restricted stock grants and units, restricted stock grants and units, and unrestricted stock grants.  A maximum of 100,000 shares of common stock may be issued under the LTIP over the ten-year life of the plan.  The maximum number of shares of common stock subject to awards that may be granted to any participant in any one calendar year is 2,000.  Shares of common stock issued under the LTIP may be treasury shares or authorized but unissued shares.  The LTIP will be administered by the Compensation Committee of the Board, or the full Board, provided that the full Board will administer the LTIP as it relates to awards to non-employee directors of the Company.  The Company filed a registration statement with the Securities and Exchange Commission on May 11, 2016 covering the offering of stock under the LTIP.  The LTIP was effective on July 1, 2016.

On November 20, 2018, the Board accelerated the vesting period for restricted stock granted in 2016, 2017, and 2018 to one retiring officer from three years to that officer’s 2019 retirement date, which had been fully recognized as of March 31, 2019.
  
On May 6, 2019, the Board awarded stock to non-employee directors effective May 6, 2019.  This stock award vested immediately.  On May 6, 2019, the Compensation Committee awarded restricted stock to officers and key employees effective May 6, 2019.  This restricted stock award vests ratably over three years beginning May 6, 2019. 

The restricted stock awards provide the grantee with the rights of a shareholder, including the right to receive dividends and to vote such shares, but not the right to sell or otherwise transfer the shares during the restriction period.  As a result, the awards are included in common shares outstanding on the balance sheet.  Restricted stock awards result in compensation expense valued at the fair market value of the stock on the date of the grant and are amortized ratably over the restriction period.

The following tables summarize the stock grant amounts and activity for the six months ended June 30, 2019.

   
Number of Shares
   
Grant Date Weighted
Average Fair Value
 
Nonvested at beginning of the period
   
3,080
   
$
33.85
 
Granted
   
6,963
    $
33.61
 
Vested
   
(2,556
)
  $
33.80
 
Forfeited
   
     
 
Nonvested at end of the period
   
7,487
   
$
33.64
 

For the three months ended June 30, 2019 and 2018, the statement of income includes $65 and $53 of stock-based compensation, respectively, and related recognized tax benefits of $19 and $15, respectively. For the six months ended June 30, 2019 and 2018, the statement of income includes $79 and $57 of stock-based compensation, respectively, and related recognized tax benefits of $23 and $16, respectively. The total fair value of the shares vested in the six months ended June 30, 2019 was $86. Total stock-based compensation related to nonvested awards not yet recognized is $252 which will be recognized over the remaining three year vesting period.

12.  Income Taxes

The Company filed for a change in accounting method under the Internal Revenue Service tangible property regulations, or TPR, effective in 2014.  Under the change in accounting method, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return.  This ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable.  It also results in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.

The Company’s effective tax rate was 15.2% and 7.6% for the three months ended June 30, 2019 and 2018, respectively, and 17.3% and 16.2% for the six months ended June 30, 2019 and 2018, respectively.  The effective tax rate is higher for the three and six months ended June 30, 2019 compared to 2018, primarily due to a lower level of eligible asset improvements that were placed into service and higher state income taxes.  The effective tax rate will vary depending on the level of eligible asset improvements expensed for tax purposes under TPR each period.

13.  Impact of Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-02, Leases (Topic 842), which replaces the existing guidance in Accounting Standard Codification 840 – Leases.  This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases.  Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability.  For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense.  This ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years.  The Company adopted the standard on January 1, 2019.  The Company did not identify any material leases under this standard, and therefore the adoption did not have a material effect on its financial position, results of operations or cash flows.

Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(In thousands of dollars, except per share amounts)
 
Forward-looking Statements

Certain statements contained in this report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933.  Words such as "may," "should," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements.  These forward-looking statements include certain information relating to the Company’s business strategy; statements including, but not limited to:

the amount and timing of rate changes and other regulatory matters including the recovery of costs recorded as regulatory assets;
expected profitability and results of operations;
trends;
goals, priorities and plans for, and cost of, growth and expansion;
strategic initiatives;
availability of water supply;
water usage by customers; and
the ability to pay dividends on common stock and the rate of those dividends.

The forward-looking statements in this report reflect what the Company currently anticipates will happen.  What actually happens could differ materially from what it currently anticipates will happen.  The Company does not intend to make a public announcement when forward-looking statements in this report are no longer accurate, whether as a result of new information, what actually happens in the future or for any other reason.  Important matters that may affect what will actually happen include, but are not limited to:

changes in weather, including drought conditions or extended periods of heavy rainfall;
levels of rate relief granted;
the level of commercial and industrial business activity within the Company's service territory;
construction of new housing within the Company's service territory and increases in population;
changes in government policies or regulations, including the tax code;
the ability to obtain permits for expansion projects;
material changes in demand from customers, including the impact of conservation efforts which may impact the demand of customers for water;
changes in economic and business conditions, including interest rates, which are less favorable than expected;
loss of customers;
changes in, or unanticipated, capital requirements;
the impact of acquisitions;
changes in accounting pronouncements;
changes in the Company’s credit rating or the market price of its common stock; and
the ability to obtain financing.



General Information

The primary business of the Company is to impound, purify to meet or exceed safe drinking water standards and distribute water.  The Company also owns and operates three wastewater collection systems and two treatment systems.  The Company operates within its franchised water territory, which covers 39 municipalities within York County, Pennsylvania and nine municipalities within Adams County, Pennsylvania.  The Company’s wastewater operations include portions of four municipalities in York County, Pennsylvania.  The Company is regulated by the Pennsylvania Public Utility Commission, or PPUC, for both water and wastewater in the areas of billing, payment procedures, dispute processing, terminations, service territory, debt and equity financing and rate setting.  The Company must obtain PPUC approval before changing any practices associated with the aforementioned areas.

Water service is supplied through the Company's own distribution system.  The Company obtains the bulk of its water supply from both the South Branch and East Branch of the Codorus Creek, which together have an average daily flow of 73.0 million gallons.  This combined watershed area is approximately 117 square miles.  The Company has two reservoirs, Lake Williams and Lake Redman, which together hold up to approximately 2.2 billion gallons of water.  The Company supplements its reservoirs with a 15-mile pipeline from the Susquehanna River to Lake Redman which provides access to an additional supply of 12.0 million gallons of untreated water per day.  The Company also owns seven wells which are capable of providing a safe yield of approximately 366,000 gallons per day to supply water to its customers in Carroll Valley Borough and Cumberland Township, Adams County.  As of June 30, 2019, the Company's average daily availability was 35.4 million gallons, and average daily consumption was approximately 20.1 million gallons.  The Company's service territory had an estimated population of 199,000 as of December 31, 2018.  Industry within the Company's service territory is diversified, manufacturing such items as fixtures and furniture, electrical machinery, food products, paper, ordnance units, textile products, air conditioning systems, laundry detergent, barbells and motorcycles.

The Company's water business is somewhat dependent on weather conditions, particularly the amount and timing of rainfall.  Revenues are particularly vulnerable to weather conditions in the summer months.  Prolonged periods of hot and dry weather generally cause increased water usage for watering lawns, washing cars, and keeping golf courses and sports fields irrigated.  Conversely, prolonged periods of dry weather could lead to drought restrictions from governmental authorities.  Despite the Company’s adequate water supply, customers may be required to cut back water usage under such drought restrictions which would negatively impact revenues.  The Company has addressed some of this vulnerability by instituting minimum customer charges which are intended to cover fixed costs of operations under all likely weather conditions.

The Company’s business does not require large amounts of working capital and is not dependent on any single customer or a very few customers for a material portion of its business.  Increases in revenues are generally dependent on the Company’s ability to obtain rate increases from the PPUC in a timely manner and in adequate amounts and to increase volumes of water sold through increased consumption and increases in the number of customers served.  The Company continuously looks for water and wastewater acquisition and expansion opportunities both within and outside its current service territory as well as additional opportunities to enter into bulk water contracts with municipalities and other entities to supply water.

The Company has agreements with several municipalities to provide sewer billing and collection services.  The Company also has a service line protection program on a targeted basis in order to further diversify its business.  Under this optional program, customers pay a fixed monthly fee, and the Company will repair or replace damaged customer service lines, as needed, subject to an annual maximum dollar amount.  Opportunities to expand both initiatives are being pursued.
Results of Operations

Three Months Ended June 30, 2019 Compared
With Three Months Ended June 30, 2018

Net income for the second quarter of 2019 was $3,717, an increase of $412, or 12.5%, from net income of $3,305 for the same period of 2018.  The primary contributing factor to the increase was higher operating revenues which were partially offset by higher income taxes and operating expenses.

Operating revenues for the second quarter of 2019 increased $1,022, or 8.5%, from $12,026 for the three months ended June 30, 2018 to $13,048 for the corresponding 2019 period.  The primary reason for the increase was a rate increase effective March 1, 2019.  The Company reduced revenue by $21 in the second quarter of 2019 and $572 in the same period of 2018, by recording a regulatory liability for the benefit of the lower tax rate effective January 1, 2018 resulting from the enactment of the 2017 Tax Act, which it has agreed to give back to customers as part of the new rate order, including the gross-up of revenue necessary to return the effect of the temporary tax difference.  Growth in the customer base also added to revenues.  The average number of customers served in 2019 increased as compared to 2018 by 507 customers, from 70,003 to 70,510 customers.  The increased revenues were partially offset by a $436 decrease from a lower distribution system improvement charge, or DSIC, allowed by the PPUC.  The DSIC reset to zero on March 1, 2019 when the rate order took effect.  Total per capita consumption for the second quarter of 2019 was approximately 2.3% lower than the same period of last year.

Operating expenses for the second quarter of 2019 increased $266, or 4.0%, from $6,708 for the second quarter of 2018 to $6,974 for the corresponding 2019 period.  The increase was primarily due to higher expenses of approximately $309 for depreciation, $81 for maintenance, and $55 for wages.  Other expenses increased by a net of $38.  The increase was partially offset by reduced expenses of approximately $169 for health insurance and $48 for a prior year consulting engagement, not repeated this year.

Interest on debt for the second quarter of 2019 decreased $80, or 5.8%, from $1,376 for the second quarter of 2018 to $1,296 for the corresponding 2019 period.  The decrease was primarily due to lower interest on long-term debt due to the refinancing of the 10.17% and 9.60% Senior Notes with 4.54% Senior Notes.  The average debt outstanding under the lines of credit was $2,253 for the second quarter of 2019 and $6,819 for the second quarter of 2018.  The weighted average interest rate on the lines of credit was 3.71% for the quarter ended June 30, 2019 and 3.16% for the quarter ended June 30, 2018.

Allowance for funds used during construction increased $56, from $31 in the second quarter of 2018 to $87 in the corresponding 2019 period, due to higher volume of eligible construction.  Eligible 2019 construction expenditures include dam improvements.

Other income (expenses), net for the second quarter of 2019 reflects increased expenses of $44 as compared to the same period of 2018.  Lower earnings on life insurance policies of approximately $23 were the primary reason for the increased expenses.  Other expenses increased by a net of $21.

Income taxes for the second quarter of 2019 increased $394, or 145.9%, compared to the same period of 2018, due primarily to a lower volume of asset improvements eligible for the tax benefit under the Internal Revenue Service, or IRS, tangible property regulations, or TPR, and higher state income taxes.  The Company’s effective tax rate was 15.2% for the second quarter of 2019 and 7.6% for the second quarter of 2018.

Six Months Ended June 30, 2019 Compared
With Six Months Ended June 30, 2018

Net income for the first six months of 2019 was $6,530, an increase of $631, or 10.7%, from net income of $5,899 for the same period of 2018.  The primary contributing factor to the increase was higher operating revenues which were partially offset by higher operating expenses and income taxes.


Operating revenues for the first six months of 2019 increased $1,209, or 5.1%, from $23,670 for the six months ended June 30, 2018 to $24,879 for the corresponding 2019 period.  The primary reason for the increase was a rate increase effective March 1, 2019.  The Company reduced revenue by $305 in the first six months of 2019 and $983 in the same period of 2018, by recording a regulatory liability for the benefit of the lower tax rate effective January 1, 2018 resulting from the enactment of the 2017 Tax Act, which it has agreed to give back to customers as part of the new rate order, including the gross-up of revenue necessary to return the effect of the temporary tax difference.  Growth in the customer base also added to revenues.  The average number of customers served in 2019 increased as compared to 2018 by 583 customers, from 69,851 to 70,434 customers.  The increased revenues were partially offset by a $667 decrease from a lower DSIC allowed by the PPUC.  The DSIC reset to zero on March 1, 2019 when the rate order took effect.  Total per capita consumption for the first six months of 2019 was approximately 2.0% lower than the same period of last year.  For the remainder of the year, the Company expects revenues to increase due to the increase in rates, higher summer demand and an increase in the number of water and wastewater customers from acquisitions and growth within the Company’s service territory.  Other regulatory actions and weather patterns could impact results.

Operating expenses for the first six months of 2019 increased $307, or 2.3%, from $13,212 for the first six months of 2018 to $13,519 for the corresponding 2019 period.  The increase was primarily due to higher expenses of approximately $359 for depreciation, $152 for wages, $71 for maintenance, $61 for purchased power related to raw water pumping, and $52 for taxes other than income taxes.  The increase was partially offset by reduced expenses of approximately $259 for health insurance, $75 for wastewater operating expenses, and $48 for a prior year consulting engagement, not repeated this year.  Other expenses decreased by a net of $6.  For the remainder of the year, the Company expects depreciation expense to continue to rise due to additional investment in utility plant, and other expenses to increase at a moderate rate as costs to treat water and to maintain and extend the distribution system continue to rise.

Interest on debt for the first six months of 2019 decreased $117, or 4.3%, from $2,740 for the six months of 2018 to $2,623 for the corresponding 2019 period.  The decrease was primarily due to lower interest on long-term debt due to the refinancing of the 10.17% and 9.60% Senior Notes with 4.54% Senior Notes.  The average debt outstanding under the lines of credit was $3,426 for the first six months of 2019 and $6,702 for the first six months of 2018.  The weighted average interest rate on the lines of credit was 3.71% for the six months ended June 30, 2019 and 3.00% for the six months ended June 30, 2018.  Interest expense for the remainder of the year is expected to increase due to continued borrowings under lines of credit and increases in short-term interest rates, partially offset by the refinancing of the Company’s Senior Notes.

Allowance for funds used during construction increased $33, from $123 in the first six months of 2018 to $156 in the corresponding 2019 period, due to a higher volume of eligible construction.  Eligible 2019 construction expenditures include dam improvements.  Allowance for funds used during construction for the remainder of the year is expected to increase based on a projected increase in the amount of eligible construction.

Other income (expenses), net for the first six months of 2019 reflects increased expenses of $113 as compared to the same period of 2018.  Lower earnings on life insurance policies of approximately $101 were the primary reason for the increased expenses.  Other expenses increased by a net of $12.  For the remainder of the year, other income (expenses) will be largely determined by the change in market returns and discount rates for retirement programs and related assets.

Income taxes for the first six months of 2019 increased $224, or 19.6%, compared to the same period of 2018, due primarily to a lower volume of asset improvements eligible for the tax benefit under the IRS TPR and higher state income taxes.  The Company’s effective tax rate was 17.3% for the first six months of 2019 and 16.2% for the first six months of 2018.  The Company's effective tax rate for the remainder of 2019 will largely be determined by the level of eligible asset improvements expensed for tax purposes under TPR each period.



Rate Matters

See Note 9 to the financial statements included herein for a discussion of rate matters.

The Company does not expect to collect a distribution system improvement charge or file a rate increase request in 2019.


Acquisitions and Growth

On October 8, 2013, the Company signed an agreement to purchase the wastewater collection and treatment assets of SYC WWTP, L.P. in Shrewsbury and Springfield Townships, York County, Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in 2020, at which time the Company will add approximately 30 commercial and industrial wastewater customers.

On October 25, 2018, the Company signed an agreement to purchase the wastewater collection assets of the Jacobus Borough Sewer Authority in York County, Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in the third quarter of 2019 at which time the Company will add approximately 700 wastewater customers.

On December 28, 2018, the Company signed an agreement to purchase the wastewater collection and treatment assets of Felton Borough in York County Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in 2020 at which time the Company will add approximately 130 wastewater customers.

On March 4, 2019, the Company signed an agreement to purchase the wastewater collection assets of West Manheim Township in York County, Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in 2020 at which time the Company will add approximately 1,800 wastewater customers.  These wastewater customers are currently water customers of the Company.

On June 25, 2019, the Company signed an agreement to purchase the wastewater collection and treatment assets of the Letterkenny Township Municipal Authority in Franklin County, Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in 2020 at which time the Company will add approximately 180 wastewater customers.

In total, these acquisitions are expected to be immaterial to Company results.  The Company is also pursuing other bulk water contracts and acquisitions in and around its service territory to help offset any further declines in per capita water consumption and to grow its business.

On May 10, 2017, the Company signed an emergency interconnect agreement with Dallastown-Yoe Water Authority.  The effectiveness of this agreement is contingent upon receiving approval from all required regulatory authorities.  Approval is expected to be granted in 2019 at which time the Company will begin construction of a water main extension to a single point of interconnection and either supply a minimum agreed upon amount of water to the authority, receive a payment in lieu of water, or provide water during an emergency, at current tariff rates.



Capital Expenditures

For the six months ended June 30, 2019, the Company invested $8,018 in construction expenditures for routine items and dam improvements as well as various replacements and improvements to infrastructure.  The Company was able to fund construction expenditures using internally-generated funds, line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions.

The Company anticipates construction expenditures for the remainder of 2019 of approximately $9,500 exclusive of any potential acquisitions not yet approved.  In addition to routine transmission and distribution projects, a portion of the anticipated expenditures will be for additional main extensions, dam and spillway improvements, replacing a water storage tank, expansion of a wastewater treatment plant, and various replacements and improvements to infrastructure.  The Company intends to use primarily internally-generated funds for its anticipated construction and fund the remainder through line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions.  Customer advances and contributions are expected to account for between 5% and 10% of funding requirements during the remainder of 2019.  The Company believes it will have adequate credit facilities and access to the capital markets, if necessary, to meet its anticipated capital needs in the remainder of 2019.


Liquidity and Capital Resources

Cash
The Company manages its cash through a cash management account that is directly connected to one of its lines of credit.  Excess cash generated automatically pays down outstanding borrowings under the line of credit arrangement.  If there are no outstanding borrowings, the cash is used as an earnings credit to reduce banking fees.  Likewise, if additional funds are needed beyond what is generated internally for payroll, to pay suppliers, to fund capital expenditures, or to pay debt service, funds are automatically borrowed under the line of credit.  As of June 30, 2019, the Company has borrowed $2,368 on its lines of credit and incurred a cash overdraft on its cash management account of $1,430.  The cash management facility and other lines of credit are expected to provide the necessary liquidity and funding for the Company's operations, capital expenditures, acquisitions and potential buybacks of stock for the foreseeable future.

Accounts Receivable
The accounts receivable balance tends to follow the change in revenues but is also affected by the timeliness of payments by customers and the level of the reserve for doubtful accounts.  In the three months ended June 30, 2019, the negative surcharge to return to customers the benefit of the lower tax rate resulted in a decrease in accounts receivable – customers as compared to the end of 2018.  Other receivables decreased due to the receipt of a large receivable to fund a capital project, which was outstanding at December 31, 2018.  A reserve is maintained at a level considered adequate to provide for losses that can be reasonably anticipated based on inactive accounts with outstanding balances.  Management periodically evaluates the adequacy of the reserve based on past experience, agings of the receivables, adverse situations that may affect a customer’s ability to pay, current economic conditions, and other relevant factors.  If the status of these factors deteriorates, the Company may incur additional expenses for uncollectible accounts and experience a reduction in its internally-generated funds.

Internally-generated Funds
The amount of internally-generated funds available for operations and construction depends on the Company’s ability to obtain timely and adequate rate relief, changes in regulations including taxes, customers’ water usage, weather conditions, customer growth and controlled expenses.  During the first six months of 2019, the Company generated $8,570 internally from operations, consistent with the $8,531 it generated during the first six months of 2018.

Credit Lines
Historically, the Company has borrowed $15,000 to $20,000 under its lines of credit before refinancing with long-term debt or equity capital.  As of June 30, 2019, the Company maintained unsecured lines of credit aggregating $41,500 with four banks at interest rates of LIBOR plus 1.15% to LIBOR plus 1.25%.  The Company had $2,368 in outstanding borrowings under its lines of credit as of June 30, 2019.  The weighted average interest rate on line of credit borrowings as of June 30, 2019 was 3.69%.

In the second quarter of 2019, the Company renewed its $13,000 and $11,000 committed lines of credit and extended the maturity date of each to May 2020, and it renewed its $7,500 committed line of credit and extended the maturity date to June 2020.  The Company plans to renew its $10,000 committed line of credit that expires in September 2019 for an additional year under similar terms and conditions.

The Company has taken steps to manage the risk of reduced credit availability.  It has maintained committed lines of credit that cannot be called on demand and obtained a 2-year revolving maturity on most of its facilities.  There is no guarantee that the Company will be able to obtain sufficient lines of credit with favorable terms in the future.  If the Company is unable to obtain sufficient lines of credit or to refinance its line of credit borrowings with long-term debt or equity when necessary, it may have to eliminate or postpone capital expenditures.  Management believes the Company will have adequate capacity under its current lines of credit to meet anticipated financing needs throughout 2019.

Long-term Debt
The Company’s loan agreements contain various covenants and restrictions.  Management believes it is currently in compliance with all of these restrictions.  See Note 6 to the Company's Annual Report on Form 10-K for the year ended December 31, 2018 for additional information regarding these restrictions.

On January 31, 2019, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $20,000 aggregate principal amount of the Company’s senior notes.  The senior notes bear interest at 4.54% per annum payable semiannually and mature on January 31, 2049.  The senior notes are unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting issuance costs, of approximately $19,820.  The net proceeds were used to refinance the $11,000 aggregate principal amount of the Company’s 10.17% Series A Senior Notes due February 1, 2019 and the 9.60% Series B Senior Notes due February 1, 2019, and to refinance line of credit borrowings incurred by the Company as interim financing for various capital projects of the Company.

The York Country Industrial Development Authority Revenue Bonds, Series 2006, the Pennsylvania Economic Development Bond Financing Authority Exempt Facility Revenue Refunding Bonds, Series 2014, and the Monthly Senior Notes, Series 2010A are currently callable.  The Company may refinance these bonds before maturity to take advantage of lower interest rates.

The Company’s total long-term debt as a percentage of the total capitalization, defined as total common stockholders’ equity plus total long-term debt, was 43.3% as of June 30, 2019 and 43.2% as of December 31, 2018.  The Company expects the debt to total capitalization ratio to increase with additional line of credit borrowings.  The Company expects to allow the debt percentage to trend upward until it approaches fifty percent before considering additional equity.  A debt to total capitalization ratio between forty-six and fifty percent has historically been acceptable to the PPUC in rate filings.  Due to its ability to generate more cash internally, the Company has been able to keep its ratio below fifty percent.

Income Taxes, Deferred Income Taxes and Uncertain Tax Positions
The Company filed for a change in accounting method under the IRS TPR effective in 2014.  Under the change in accounting method, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return.  This ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable.  It also results in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.

The Company’s effective tax rate will largely be determined by the level of eligible asset improvements expensed for tax purposes that would have been capitalized for tax purposes prior to the implementation of TPR.

The Company has a substantial deferred income tax asset primarily due to the excess accumulated deferred income taxes on accelerated depreciation from the 2017 Tax Act and the differences between the book and tax balances of the pension and deferred compensation plans.  The Company does not believe a valuation allowance is required due to the expected generation of future taxable income during the periods in which those temporary differences become deductible.

The Company has seen an increase in its deferred income tax liability amounts primarily as a result of the accelerated and bonus depreciation deduction available for federal tax purposes which creates differences between book and tax depreciation expense.  The Company expects this trend to continue as it makes significant investments in capital expenditures subject to accelerated depreciation or TPR, but at a more modest rate due to the elimination of bonus depreciation on qualified water and wastewater property.

The Company has determined there are no uncertain tax positions that require recognition as of June 30, 2019.

Common Stock
Common stockholders’ equity as a percent of the total capitalization was 56.7% as of June 30, 2019 and 56.8% as of December 31, 2018.  The volume of share repurchases and line of credit borrowings, among other things, could reduce this percentage in the future.  It is the Company’s general intent to target a ratio between fifty and fifty-four percent.

Credit Rating
On April 5, 2019, Standard & Poor’s affirmed the Company’s credit rating at A-, with a stable outlook and adequate liquidity.  The Company’s ability to maintain its credit rating depends, among other things, on adequate and timely rate relief, which it has been successful in obtaining, its ability to fund capital expenditures in a balanced manner using both debt and equity and its ability to generate cash flow.  The Company’s objectives are to continue to maximize its funds provided by operations and maintain a strong capital structure in order to be able to attract capital.


Physical and Cyber Security

The Company maintains security measures at its facilities, and collaborates with federal, state and local authorities and industry trade associations regarding information on possible threats and security measures for water and wastewater utility operations.  The costs incurred are expected to be recoverable in water and wastewater rates and are not expected to have a material impact on its business, financial condition, or results of operations.

The Company relies on information technology systems in connection with the operation of the business, especially with respect to customer service, billing, accounting, and in some cases, the monitoring and operation of treatment, storage and pumping facilities.  In addition, the Company relies on these systems to track utility assets and to manage maintenance and construction projects, materials and supplies, and human resource functions.  The information technology systems may be vulnerable to damage or interruption from cyber security attacks or other cyber-related events, including, but not limited to, power loss, computer systems failures, internet, telecommunications or data network failures, physical and electronic loss of data, computer viruses, intentional security breaches, hacking, denial of service actions, misappropriation of data, and similar events.  In some cases, administration of certain functions may be outsourced to third-party service providers that could also be targets of cyber security attacks.  A loss of these systems, or major problems with the operation of these systems, could harm the business, financial condition, and results of operations of the Company through the loss or compromise of customer, financial, employee, or operational data, disruption of billing, collections or normal field service activities, disruption of electronic monitoring and control of operational systems, and delays in financial reporting and other normal management functions.

Possible impacts associated with a cyber security attack or other events may include remediation costs related to lost, stolen, or compromised data, repairs to data processing systems, increased cyber security protection costs, adverse effects on our compliance with regulatory and environmental laws and regulation, including standards for drinking water, litigation, and reputational damage.

The Company has implemented processes, procedures and controls to prevent or limit the effect of these possible events, and maintains insurance to help defray costs associated with cyber security attacks.  The Company has not experienced a material impact on business or operations from these attacks.  Although the Company does not believe its systems are at a materially greater risk of cyber security attacks than other similar organizations and despite the implementation of robust security measures, the Company cannot provide assurance that the insurance will fully cover the costs of a cyber security event, and its robust security measures do not guarantee that reputation and financial results will not be adversely affected by such an incident.


Environmental Matters

The Company entered into a consent order agreement with the Pennsylvania Department of Environmental Protection in December 2016 after the Company determined it exceeded the action level for lead as established by the Lead and Copper Rule, or LCR, issued by the U.S. Environmental Protection Agency.  The Company did not have an exceedance in any subsequent compliance test.  Under the agreement, the Company committed to exceed the LCR replacement schedule by replacing all of the remaining known company-owned lead service lines within four years from the agreement.  The cost for these service line replacements was approximately $2,466 and $2,341 through June 30, 2019 and December 31, 2018, respectively, and is included in utility plant.  As of June 30, 2019, all known company-owned lead service lines have been replaced.  Any additional company-owned lead service lines that are discovered will be replaced but are not expected to have a material impact on the financial position of the Company.

The Company was granted approval by the Pennsylvania Public Utility Commission, or PPUC, to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the agreement.  The tariff modification allows the Company to replace customer-owned service lines at its own initial cost.  The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period.  The cost for the customer-owned lead service line replacements was approximately $474 and $304 through June 30, 2019 and December 31, 2018, respectively, and is included as a regulatory asset.  Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $910.  This estimate is subject to adjustment as more facts become available.


Critical Accounting Estimates

The methods, estimates, and judgments the Company used in applying its accounting policies have a significant impact on the results reported in its financial statements.  The Company’s accounting policies require management to make subjective judgments because of the need to make estimates of matters that are inherently uncertain.  The Company’s most critical accounting estimates include regulatory assets and liabilities, revenue recognition and accounting for its pension plans.  There has been no significant change in accounting estimates or the method of estimation during the quarter ended June 30, 2019.


Off-Balance Sheet Arrangements

The Company does not use off-balance sheet transactions, arrangements or obligations that may have a material current or future effect on financial condition, results of operations, liquidity, capital expenditures, capital resources or significant components of revenues or expenses.  The Company does not use securitization of receivables or unconsolidated entities. For risk management purposes, the Company uses a derivative financial instrument, an interest rate swap agreement discussed in Note 5 to the financial statements included herein.  The Company does not engage in trading or other risk management activities, does not use other derivative financial instruments for any purpose, has no guarantees and does not have material transactions involving related parties.

Item 3.
Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.


Item 4.
Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of the Company's President and Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report.  Based upon this evaluation, the Company's President and Chief Executive Officer along with the Chief Financial Officer concluded that the Company's disclosure controls and procedures as of the end of the period covered by this report are effective such that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to the Company’s management, including the President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

No change in the Company's internal control over financial reporting occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION


 Item 6.
 Exhibits.

Exhibit No.
Description

 
 
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
 

SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 
THE YORK WATER COMPANY
   
   
  /s/ Jeffrey R. Hines
Date: August 2, 2019
Jeffrey R. Hines
Principal Executive Officer
   
   
   
 
/s/ Matthew E. Poff
Date: August 2, 2019
Matthew E. Poff
Principal Financial and Accounting Officer
   

EX-31.1 2 exhibit311.htm YWC CERTIFICATION OF CEO 06-30-19


EXHIBIT 31.1
CERTIFICATIONS


I, Jeffrey R. Hines, certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q of The York Water Company;
 
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 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; and
 
 
d)
disclosed in this 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 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 function):
 
 
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 control over financial reporting.
 

Date: August 2, 2019
/s/ Jeffrey R. Hines
 
Jeffrey R. Hines
 
President and CEO
EX-31.2 3 exhibit312.htm YWC CERTIFICATION OF CFO 06-30-19

 
EXHIBIT 31.2
CERTIFICATIONS


I, Matthew E. Poff, certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q of The York Water Company;
 
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 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; and
 
 
d)
disclosed in this 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 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 function):
 
 
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 control over financial reporting.
 

Date: August 2, 2019
/s/ Matthew E. Poff
 
Matthew E. Poff
 
Chief Financial Officer
EX-32.1 4 exhibit321.htm YWC SECTION 906 CERTIFICATION OF CEO 06-30-19

 
EXHIBIT 32.1


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of The York Water Company (the “Company”) on Form 10-Q for the period ending June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeffrey R. Hines, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)
The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)); and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


 
THE YORK WATER COMPANY
   
   
   
   
Date: August 2, 2019
/s/ Jeffrey R. Hines
 
Jeffrey R. Hines
 
Chief Executive Officer
EX-32.2 5 exhibit322.htm YWC SECTION 906 CERTIFICATION OF CFO 06-30-19

 
EXHIBIT 32.2


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of The York Water Company (the “Company”) on Form 10-Q for the period ending June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Matthew E. Poff, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)
The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)); and
   
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


 
THE YORK WATER COMPANY
   
   
   
   
Date: August 2, 2019
/s/ Matthew E. Poff
 
Matthew E. Poff
 
Chief Financial Officer
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Pronouncements, Policy [Policy Text Block] Supplemental disclosure of non-cash investing and financing activities: Accounts payable includes $1,587 in 2019 and $1,624 in 2018 for the construction of utility plant. OTHER INCOME (EXPENSES): Other income (expenses) Nonoperating Income (Expense) Note receivable Operating income Operating Income (Loss) Rents from regulated property Basis of Presentation [Abstract] Basis of Presentation Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] Other Commitments [Domain] Other Commitments [Axis] Commitments [Abstract] Other Commitments [Abstract] Other Commitments [Line Items] Other Commitments [Table] Other Other Noncash Income (Expense) Other receivables Other Receivables, Gross, Current Other assets Other income (expenses), net Other deferred credits Cash paid during the period for: Payments for Operating Activities [Abstract] Repurchase of common stock Payments for Repurchase of Common Stock Dividends paid Payments of Ordinary Dividends, Common Stock Debt issuance costs Payments of Debt Issuance Costs Utility plant additions, including debt portion of allowance for funds used during construction of $87 in 2019 and $69 in 2018 Payments to Acquire Property, Plant, and Equipment Acquisitions of water and wastewater systems Payments to Acquire Water and Waste Water Systems Contributions made by employer Pension Plans [Member] Pension Plan [Member] Pensions Pension and Other Postretirement Benefits Disclosure [Text Block] Deferred employee benefits Plan Name [Axis] Plan Name [Domain] Portion at Fair Value Measurement [Member] Preferred stock, issued (in shares) PREFERRED STOCK, authorized 500,000 shares, no shares issued Preferred stock, authorized (in shares) Prepaid expenses Proceeds from debt, net of issuance costs Changes in cash overdraft position Customers' advances for construction and contributions in aid of construction Issuance of common stock Proceeds of long-term debt issues Borrowings under short-term line of credit agreements Proceeds from Lines of Credit Cash received from surrender of life insurance policies OTHER PHYSICAL PROPERTY, net of accumulated depreciation of $422 in 2019 and $410 in 2018 Materials and supplies inventories, at cost Public Utilities General Disclosures [Table] Rate Matters Public Utilities Disclosure [Text Block] Utility Service [Member] Public Utilities [Member] Public Utilities, Regulatory Proceeding [Domain] Plant acquisition adjustments Rate Matters [Abstract] Public Utilities, Rate Matters [Abstract] Public Utilities, Regulatory Proceeding [Axis] Public Utilities, General Disclosures [Line Items] Requested increase in annual revenue Public Utilities, Requested Rate Increase (Decrease), Amount Authorized dollar increase in annual revenues from the PPUC Public Utilities, Approved Rate Increase (Decrease), Amount Allowance for funds used during construction Utility plant additions, debt portion of allowance for funds used during construction UTILITY PLANT, at original cost Net utility plant Public Utilities, Property, Plant and Equipment, Net Accumulated depreciation Public Utilities, Property, Plant and Equipment, Accumulated Depreciation Accounts receivable, net Receivables, Net, Current Rate Matters [Abstract] Regulatory Agency [Axis] Deferred regulatory liabilities Regulatory Liability, Current Regulatory Agency [Domain] Deferred regulatory liabilities Deferred regulatory assets Recovery period of regulatory asset Remaining Recovery Period of Regulatory Assets for which No Return on Investment During Recovery Period is Provided Repayments of long-term debt Repayments of Long-term Debt Repayments of customer advances Repayments of Advances for Construction Repayments under short-term line of credit agreements Repayments of Lines of Credit Restricted Stock [Member] Stock-based compensation Restricted Stock or Unit Expense Retained Earnings [Member] Retained earnings Retirement Plan Type [Axis] Retirement Plan Type [Domain] Revenue [Abstract] Revenue Revenue from Contract with Customer [Text Block] Revenue from contracts with customers Revenue from Contract with Customer, Excluding Assessed Tax OPERATING REVENUES Total 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Unamortized Debt Issuance Expense Unbilled revenues Depreciation and amortization Operating expenses Utilities Operating Expense Taxes other than income taxes Operation and maintenance OPERATING EXPENSES: Variable Rate [Domain] Variable Rate [Axis] Weighted average common shares, basic (in shares) Weighted Average Number of Shares Outstanding, Basic Weighted average common shares, diluted (in shares) Weighted Average Number of Shares Outstanding, Diluted Effect of dilutive securities [Abstract] Shares Used in Computing Basic and Diluted Earnings per Share [Abstract] Customer [Axis] Maximum [Member] Minimum [Member] Customer [Domain] Products and Services [Domain] Products and Services [Axis] Range [Domain] Range [Axis] Relationship to Entity [Domain] Title of Individual [Axis] Notional amount of swap Element represents the change in the defined benefit plan regulatory asset from pension contribution greater (less) than net periodic benefit cost. Deferral declined pension cost amount Rate-regulated adjustment Common Stock and Earnings Per Share [Abstract] The entire disclosure for earnings per share and other matters related to common stock. Common Stock and Earnings Per Share [Text Block] Common Stock and Earnings Per Share Stock Repurchase Program [Abstract] Stock Repurchase Program [Abstract] Allows the Company to add a charge to customers' bills for qualified replacement costs of certain infrastructure without submitting a rate filing. This surcharge mechanism typically adjusts periodically based on additional qualified capital expenditures completed or anticipated in a future period. Distribution System Improvement Charge [Member] DSIC [Member] Amount of the distribution system improvement charge (DSIC) revenue. The DSIC allows the Company to add a charge to customers' bills for qualified replacement costs of certain infrastructure without submitting a rate filing as permitted by the regulatory agency. Distribution system improvement charge revenue Percentage of the distribution system improvement charge (DSIC) over the base rate. The DSIC allows the Company to add a charge to customers' bills for qualified replacement costs of certain infrastructure without submitting a rate filing as permitted by the regulatory agency. Distribution system improvement charge percentage over base rate Distribution system improvement charge percentage over base rate Amount reclassified from the regulatory liability for Excess accumulated deferred income taxes on accelerated depreciation to the regulatory liability for Revenue reduction for Tax Rate change. Reclassification of regulatory liability for excess accumulated deferred income taxes on accelerated depreciation Reclassification from excess accumulated deferred income taxes on accelerated depreciation Amount agreed to be returned to ratepayers for effects of the Tax Cuts and Jobs Act of 2017, or the 2017 Tax Act, as a reconcilable negative surcharge to bills generated from March 2019 through February 2020. Amount agreed to be returned to ratepayers for effects of 2017 Tax Act Amount agreed to be returned to customers for effects of 2017 Tax Act Increase (decrease) in revenue recorded as a regulatory liability for the difference in calculated current federal income taxes and deferred federal income taxes on accelerated depreciation associated with the Tax Cuts and Jobs Act of 2017, or the 2017 Tax Act. Revenue recorded as regulatory liability for effects of 2017 Tax Act Revenue recorded as regulatory liability for effects of 2017 Tax Act The public utility commission in the state of Pennsylvania that regulates the areas of billing, payment procedures, dispute processing, terminations, service territory, debt and equity financing and rate setting. Pennsylvania Public Utility Commission [Member] PPUC [Member] Utility services related to the impoundment, purification and distribution of water. Water Utility Service [Member] Water [Member] Water Utility Service [Member] Utility services related to the collection of wastewater. Wastewater Utility Service [Member] Wastewater [Member] Wastewater Utility Service [Member] Rate request filed on May 30, 2018 with the Pennsylvania Public Utility Commission (PPUC). Rate Request Filed on May 30, 2018 [Member] Rate Request Filed on May 30, 2018 [Member] The amount of reconcilable negative surcharges returned to ratepayers for effects of the Tax Cuts and Jobs Act of 2017, or the 2017 Tax Act, on bills generated during the period. Negative surcharges returned to ratepayers for effects of 2017 Tax Act Negative surcharges returned to customers for effects of 2017 Tax Act The amount of (gains) or losses on an interest rate swap deferred in the period and recorded as a (decrease)/increase in the regulatory asset. Interest rate swap (gain) loss deferred as regulatory asset Overall interest rate swap (gain) loss The amount reclassified from regulatory assets to interest expense during the period as a result of interest rate swap settlements. The Company uses regulatory accounting treatment rather than hedge accounting to defer the unrealized gains and losses on its interest rate swap. Instead of the effective portion being recorded as other comprehensive income or loss and the ineffective portion being recognized in earnings using the cash flow hedge accounting rules provided by the derivative accounting standards, the entire unrealized swap value is recorded as a regulatory asset. Based on current ratemaking treatment, the Company expects the unrealized gains and losses to be recognized in rates as a component of interest expense as the swap settlements occur. Swap settlements are recorded in the income statement with the hedged item as interest expense. Interest rate cash flow hedge settlements reclassified from regulatory asset to interest expense Interest rate swap settlements reclassified from regulatory assets to interest expense The potential amount payable to the interest rate swap counter party due to certain violations of the terms and conditions of the swap agreement. Potential payment to counterparty Net payment rate on interest rate derivative with the counterparty for the period. Net payment rate on swaps Net payment rate on swap Term of the interest rate that fluctuates over time as a result of an underlying benchmark interest rate or index. Debt Instrument, Term of variable rate Term of variable rate Percentage of variable interest rate paid by the counterparty on the notional amount of the interest rate derivative. Derivative, Percentage of Variable Interest Rate Percentage of variable interest rate Variable rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029. Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029 [Member] Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029 [Member] 10.17% Senior Notes, Series A, and 9.60% Senior Notes, Series B, due February 1, 2019. 10.17% Series A Senior Notes and 9.60% Series B Senior Notes, due 2019 [Member] 10.17% Series A Senior Notes and 9.60% Series B Senior Notes [Member] Industrial Development Authority Revenue. Industrial Development Authority Revenue [Member] 4.75% York County Industrial Development Authority Revenue Bonds, Series 2006, due 2036 [Member] 10.17% Senior Notes, Series A, due 2019. Senior Notes, Series A, due 2019 [Member] 10.17% Senior Notes, Series A, due 2019 [Member] 10.05% Senior Notes, Series C, due 2020. Senior Notes, Series C, due 2020 [Member] 10.05% Senior Notes, Series C, due 2020 [Member] 1.00% Pennvest Note, due 2019. Pennvest Note, due 2019 [Member] 1.00% Pennvest Note, due 2019 [Member] 9.60% Senior Notes, Series B, due 2019. Senior Notes, Series B, due 2019 [Member] 9.60% Senior Notes, Series B, due 2019 [Member] 5.00% Monthly Senior Notes, Series 2010A, due 2040. Monthly Senior Notes, Series 2010A, due 2040 [Member] 5.00% Monthly Senior Notes, Series 2010A, due 2040 [Member] 8.43% Senior Notes, Series D, due 2022. Senior Notes, Series D, due 2022 [Member] 8.43% Senior Notes, Series D, due 2022 [Member] A contractual arrangement with a lender under which borrowings can be made up to $10,000,000 at any point in time, and under which borrowings outstanding may be either short-term or long-term, depending upon the particulars. Line of Credit 4 [Member] Fourth Line of Credit [Member] A contractual arrangement with a lender under which borrowings can be made up $13,000,000 at any point in time, and under which borrowings outstanding may be either short-term or long-term, depending upon the particulars. Line of Credit 1 [Member] First Line of Credit [Member] A contractual arrangement with a lender under which borrowings can be made up $11,000,000 at any point in time, and under which borrowings outstanding may be either short-term or long-term, depending upon the particulars. Line of Credit 2 [Member] Second Line of Credit [Member] 4.50% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due November 1, 2038. Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038 [Member] 4.50% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038 [Member] A contractual arrangement with a lender under which borrowings can be made up to $7,500,000 at any point in time, and under which borrowings outstanding may be either short-term or long-term, depending upon the particulars. Prior to renewal, the maximum borrowing capacity was $5,000,000. Line of Credit 3 [Member] Third Line of Credit [Member] 4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045. 4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045 [Member] 4.54% Senior Notes due January 31, 2049. 4.54% Senior Notes, due 2049 [Member] Contractual arrangements with a lender under which borrowings can be made up to a specific amount at any point in time, and under which borrowings outstanding may be either short-term or long-term, depending upon the particulars. These committed lines of credit are due 2020. Committed Lines of Credit, due 2020 [Member] Committed Lines of Credit, due 2021 [Member] Number of common stock issued during the period from a dividend reinvestment plan (DRIP). Also, the number of of common stock issued during the period from direct stock and employee stock purchase plans. Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans, shares Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans (in shares) Value of stock issued during the period from a dividend reinvestment plan (DRIP). A dividend reinvestment plan allows the holder of the stock to reinvest dividends paid to them by the entity on new issues of stock by the entity. Also, value of stock issued during the period from direct stock and employee stock purchase plans. Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans Amount of costs incurred to date for replacing all of the remaining customer-owned lead service lines connected to company-owned lead service lines under a four-year tariff modification. Costs for Customer-Owned Lead Service Line Replacements, Cost Incurred to Date Under Four-Year Tariff Costs incurred to replace customer-owned lead service lines Period of time within which the Company will replace all of the remaining company-owned lead service lines, in PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Term to replace all remaining company-owned lead service lines Term to replace all remaining company-owned lead service lines After exceeding the action level for lead at the customer's tap as established by the Lead and Copper Rule issued by the U.S. Environmental Protection Agency during triennial testing, the Company is required to replace a percentage of the remaining company-owned service lines in its distribution system. Company-Owned Lead Service Lines [Member] Company-Owned Lead Service Lines [Member] Amount of expected cost remaining for replacing all of the remaining customer-owned lead service lines connected to company-owned lead service lines under a nine-year tariff modification. Costs for Customer-Owned Lead Service Line Replacements, Expected Cost Remaining Under Nine-Year Tariff Costs to be incurred to replace customer-owned lead service lines Amount of costs incurred to date for replacing all of the remaining known company-owned lead service lines. Costs for Company-Owned Lead Service Line Replacements, Cost Incurred to Date Costs incurred to replace company-owned lead service lines Number of lead customer-owned service lines to be replaced annually whenever they are discovered. Number of lead customer-owned service lines to be replaced annually Number of lead customer-owned service lines to be replaced annually Term of consent order agreement with the Pennsylvania Department of Environmental Protection involving the replacement of lead customer-owned service lines regardless of material used for company-owned service lines, in PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Term of consent order agreement to replace customer-owned lead service lines Term of tariff modification to replace customer-owned lead service lines Customer-owned lead service lines connected to the Company's distribution system. Customer-Owned Lead Service Lines [Member] Customer-Owned Lead Service Lines [Member] The net change during the reporting period in interest payable, which represents the amount owed to note holders, bond holders, and other parties for interest earned on loans or credit extended to the reporting entity. Also, the amount of cash payments due to taxing authorities for taxes that are based on the reporting entity's earnings. Increase (Decrease) in Accrued Interest and Taxes Decrease in accrued interest and taxes The net change during the reporting period in the value of materials and supplies held in inventory. And, the net change during the reporting period in the amount of outstanding money paid in advance for goods and services that bring economic benefits for future periods. And, the net change during the reporting period in other operating assets. Increase (Decrease) in materials and supplies, prepaid expenses, regulatory and other assets Increase in materials and supplies, prepaid expenses, regulatory and other assets The increase or decrease in the value of an interest rate swap due to a contractual agreement tied to the company's credit rating. Reduction in the fair value of swap liability Reduction in fair value of swap liability Term of debt on utilities rated A- used in discounting prospective cash flows anticipated to be made under the swap agreement reflecting a representation of the yield to maturity. Term of debt on utilities used to discount prospective cash flows Term of debt on utilities rated A- used to discount prospective cash flows Document and Entity Information [Abstract] The York Water Company Long-Term Incentive Plan (LTIP) was approved by the Company's stockholders on May 2, 2016. The LTIP was adopted to provide the incentive of long-term stock-based awards to officers, directors and key employees and provides for the granting of nonqualified stock options, incentive stock options, stock appreciation rights, performance restricted stock grants and units, restricted stock grants and units, and unrestricted stock grants. The York Water Company Long-Term Incentive Plan [Member] LTIP [Member] Term the Plan shall continue to remain effective, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Share-based Compensation Arrangement by Share-based Payment Award, Term of Plan Term of plan The number of retiring officers that had the vesting period for restricted stock accelerated to their retirement dates from three years by the Board of Directors. Share-based Compensation Arrangement by Share-based Payment Award, Number of retiring officers receiving accelerated vesting period Number of retiring officers receiving accelerated vesting period Officers and key individuals employed by the entity. Officers and Key Employees [Member] Officers and Key Employees [Member] The increase (decrease) during the reporting period in the amount due from customers or clients, within one year of the balance sheet date (or the normal operating cycle, whichever is longer), for goods or services (including trade receivables) that have been delivered or sold in the normal course of business, reduced to the estimated net realizable fair value by an allowance established by the entity of the amount it deems uncertain of collection. Increase (Decrease) in Accounts Receivable, Net Change in accounts receivable, net The total amount due to the entity within one year of the balance sheet date (or one operating cycle, if longer) from outside sources, including trade accounts receivable, notes and loans receivable, as well as any other types of receivables. Receivables, Gross, Current Accounts receivable The increase (decrease) during the reporting period in receivables classified as other, due within one year or the operating cycle, if longer. Increase (Decrease) in Other Receivables, Gross, Current Change in other receivables The increase (decrease) during the reporting period in amounts due from customers or clients, within one year of the balance sheet date (or the normal operating cycle, whichever is longer) for goods or services (including trade receivables) that have been delivered or sold in the normal course of business. Increase (Decrease) in Accounts Receivable, Gross, Current Change in accounts receivable - customers The increase (decrease) during the reporting period in the total amount due to the entity within one year of the balance sheet date (or one operating cycle, if longer) from outside sources, including trade accounts receivable, notes and loans receivable, as well as any other types of receivables. Increase (Decrease) in Receivables, Gross, Current Change in accounts receivable The increase (decrease) during the reporting period in the right to consideration in exchange for good or service transferred to customer when right is conditioned on something other than passage of time, classified as current. Increase (Decrease) in Contract with Customer, Asset, Current Change in unbilled revenue Service line protection plan provided to water customers that choose to participate. Service Line Protection Plan [Member] Other Revenue [Member] Collection services provided to several municipalities within the service territory of the Company. The municipalities provide wastewater service to its residents. If those residents are delinquent in paying for their wastewater service, the municipalities request that the Company post for and shut off the supply of water to the premises of those residents. When the resident is no longer delinquent, the Company will restore water service to the premises. Collection Services [Member] Collection Services [Member] Commercial and Industrial Customers [Member] Commercial and Industrial [Member] Residential Customers [Member] Residential [Member] Fire Protection Customers [Member] Fire Protection [Member] The number of municipalities within the service territory of the Company provided service as distinct performance obligations. Number of municipalities within the service territory provided service Number of municipalities within the service territory provided service Period of time between invoice being sent to customer and when payment is due, in PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Term for customer to make payment after being invoiced Number of days for customer to make payment after being invoiced Billing and revenue collection services provided to four municipalities that provide wastewater services within the service territory of the Company. 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Document and Entity Information - shares
6 Months Ended
Jun. 30, 2019
Aug. 02, 2019
Document and Entity Information [Abstract]    
Entity Registrant Name YORK WATER CO  
Entity Central Index Key 0000108985  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Shell Company false  
Entity Filer Category Accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Common Stock, Shares Outstanding   12,975,573
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jun. 30, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Entity Address, State or Province PA  
XML 14 R2.htm IDEA: XBRL DOCUMENT v3.19.2
Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
ASSETS    
UTILITY PLANT, at original cost $ 389,690 $ 380,784
Plant acquisition adjustments (3,079) (3,108)
Accumulated depreciation (81,595) (78,519)
Net utility plant 305,016 299,157
OTHER PHYSICAL PROPERTY, net of accumulated depreciation of $422 in 2019 and $410 in 2018 702 714
CURRENT ASSETS:    
Cash and cash equivalents 2 2
Accounts receivable, net of reserves of $343 in 2019 and $305 in 2018 4,475 4,811
Unbilled revenues 2,274 2,427
Recoverable income taxes 156 0
Materials and supplies inventories, at cost 981 876
Prepaid expenses 1,421 895
Total current assets 9,309 9,011
OTHER LONG-TERM ASSETS:    
Note receivable 255 255
Deferred regulatory assets 32,660 32,353
Other assets 3,909 3,650
Total other long-term assets 36,824 36,258
Total Assets 351,851 345,140
COMMON STOCKHOLDERS' EQUITY:    
Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 12,974,287 shares in 2019 and 12,943,536 shares in 2018 82,183 81,305
Retained earnings 46,931 44,890
Total common stockholders' equity 129,114 126,195
PREFERRED STOCK, authorized 500,000 shares, no shares issued 0 0
LONG-TERM DEBT, excluding current portion 96,085 93,328
COMMITMENTS
CURRENT LIABILITIES:    
Short-term borrowings 0 1,000
Current portion of long-term debt 7 30
Accounts payable 4,191 3,030
Dividends payable 2,006 1,999
Accrued compensation and benefits 1,108 1,191
Accrued income taxes 0 150
Accrued interest 916 992
Deferred regulatory liabilities 1,698 2,104
Other accrued expenses 280 345
Total current liabilities 10,206 10,841
DEFERRED CREDITS:    
Customers' advances for construction 7,934 6,849
Deferred income taxes 37,747 36,962
Deferred employee benefits 3,875 4,715
Deferred regulatory liabilities 24,939 24,710
Other deferred credits 2,200 1,815
Total deferred credits 76,695 75,051
Contributions in aid of construction 39,751 39,725
Total Stockholders' Equity and Liabilities $ 351,851 $ 345,140
XML 15 R3.htm IDEA: XBRL DOCUMENT v3.19.2
Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
ASSETS    
Other physical property, accumulated depreciation $ 422 $ 410
CURRENT ASSETS:    
Accounts receivables, reserves $ 343 $ 305
COMMON STOCKHOLDERS' EQUITY:    
Common stock, par value (in dollars per share) $ 0 $ 0
Common stock, authorized (in shares) 46,500,000 46,500,000
Common stock, issued (in shares) 12,974,287 12,943,536
Common stock, outstanding (in shares) 12,974,287 12,943,536
Preferred stock, authorized (in shares) 500,000 500,000
Preferred stock, issued (in shares) 0 0
XML 16 R4.htm IDEA: XBRL DOCUMENT v3.19.2
Statements of Income (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Statements of Income (Unaudited) [Abstract]        
OPERATING REVENUES $ 13,048 $ 12,026 $ 24,879 $ 23,670
OPERATING EXPENSES:        
Operation and maintenance 2,646 2,563 5,053 4,917
Administrative and general 2,103 2,254 4,009 4,249
Depreciation and amortization 1,933 1,624 3,824 3,465
Taxes other than income taxes 292 267 633 581
Operating expenses 6,974 6,708 13,519 13,212
Operating income 6,074 5,318 11,360 10,458
OTHER INCOME (EXPENSES):        
Interest on debt (1,296) (1,376) (2,623) (2,740)
Allowance for funds used during construction 87 31 156 123
Other pension costs (363) (321) (726) (642)
Other income (expenses), net (121) (77) (272) (159)
Other income (expenses) (1,693) (1,743) (3,465) (3,418)
Income before income taxes 4,381 3,575 7,895 7,040
Income taxes 664 270 1,365 1,141
Net Income $ 3,717 $ 3,305 $ 6,530 $ 5,899
Basic Earnings Per Share (in dollars per share) $ 0.28 $ 0.26 $ 0.50 $ 0.46
Diluted Earnings Per Share (in dollars per share) 0.28 0.26 0.50 0.46
Cash Dividends Declared Per Share (in dollars per share) $ 0.1733 $ 0.1666 $ 0.3466 $ 0.3332
XML 17 R5.htm IDEA: XBRL DOCUMENT v3.19.2
Statements of Common Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Common Stock [Member]
Retained Earnings [Member]
Total
Balance at Dec. 31, 2017 $ 79,201 $ 40,204 $ 119,405
Balance (in shares) at Dec. 31, 2017 12,872,742    
Increase (Decrease) in Stockholders' Equity [Roll Forward]      
Net income $ 0 5,899 5,899
Dividends 0 (4,296) (4,296)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans $ 1,146 0 1,146
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans (in shares) 37,782    
Stock-based compensation $ 57 0 57
Stock-based compensation (in shares) 3,743    
Balance at Jun. 30, 2018 $ 80,404 41,807 122,211
Balance (in shares) at Jun. 30, 2018 12,914,267    
Balance at Mar. 31, 2018 $ 79,796 40,652 120,448
Balance (in shares) at Mar. 31, 2018 12,892,798    
Increase (Decrease) in Stockholders' Equity [Roll Forward]      
Net income $ 0 3,305 3,305
Dividends 0 (2,150) (2,150)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans $ 555 0 555
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans (in shares) 17,726    
Stock-based compensation $ 53 0 53
Stock-based compensation (in shares) 3,743    
Balance at Jun. 30, 2018 $ 80,404 41,807 122,211
Balance (in shares) at Jun. 30, 2018 12,914,267    
Balance at Dec. 31, 2018 $ 81,305 44,890 $ 126,195
Balance (in shares) at Dec. 31, 2018 12,943,536   12,943,536
Increase (Decrease) in Stockholders' Equity [Roll Forward]      
Net income $ 0 6,530 $ 6,530
Dividends 0 (4,489) (4,489)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans $ 799 0 799
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans (in shares) 23,788    
Stock-based compensation $ 79 0 79
Stock-based compensation (in shares) 6,963    
Balance at Jun. 30, 2019 $ 82,183 46,931 $ 129,114
Balance (in shares) at Jun. 30, 2019 12,974,287   12,974,287
Balance at Mar. 31, 2019 $ 81,703 45,460 $ 127,163
Balance (in shares) at Mar. 31, 2019 12,954,976    
Increase (Decrease) in Stockholders' Equity [Roll Forward]      
Net income $ 0 3,717 3,717
Dividends 0 (2,246) (2,246)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans $ 415 0 415
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans (in shares) 12,348    
Stock-based compensation $ 65 0 65
Stock-based compensation (in shares) 6,963    
Balance at Jun. 30, 2019 $ 82,183 $ 46,931 $ 129,114
Balance (in shares) at Jun. 30, 2019 12,974,287   12,974,287
XML 18 R6.htm IDEA: XBRL DOCUMENT v3.19.2
Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 6,530 $ 5,899
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 3,824 3,465
Stock-based compensation 79 57
Increase in deferred income taxes 85 90
Other 158 171
Changes in assets and liabilities:    
Decrease in accounts receivable and unbilled revenues 336 15
Increase in recoverable income taxes (156) (375)
Increase in materials and supplies, prepaid expenses, regulatory and other assets (2,796) (2,895)
Increase in accounts payable, accrued compensation and benefits, accrued expenses, deferred employee benefits, regulatory liabilities, and other deferred credits 736 2,635
Decrease in accrued interest and taxes (226) (531)
Net cash provided by operating activities 8,570 8,531
CASH FLOWS FROM INVESTING ACTIVITIES:    
Utility plant additions, including debt portion of allowance for funds used during construction of $87 in 2019 and $69 in 2018 (8,018) (6,606)
Cash received from surrender of life insurance policies 0 108
Net cash used in investing activities (8,018) (6,498)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Customers' advances for construction and contributions in aid of construction 1,226 625
Repayments of customer advances (115) (202)
Proceeds of long-term debt issues 33,722 12,544
Debt issuance costs (180) 0
Repayments of long-term debt (30,882) (11,721)
Repayments under short-term line of credit agreements (1,000) 0
Changes in cash overdraft position 360 (143)
Issuance of common stock 799 1,146
Dividends paid (4,482) (4,282)
Net cash used in financing activities (552) (2,033)
Net change in cash and cash equivalents 0 0
Cash and cash equivalents at beginning of period 2 2
Cash and cash equivalents at end of period 2 2
Cash paid during the period for:    
Interest, net of amounts capitalized 2,544 2,601
Income taxes $ 1,449 $ 1,647
Supplemental disclosure of non-cash investing and financing activities:    
Accounts payable includes $1,587 in 2019 and $1,624 in 2018 for the construction of utility plant.
XML 19 R7.htm IDEA: XBRL DOCUMENT v3.19.2
Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
CASH FLOWS FROM INVESTING ACTIVITIES:    
Utility plant additions, debt portion of allowance for funds used during construction $ 87 $ 69
Supplemental disclosure of non-cash investing and financing activities:    
Accounts payable for construction of utility plant $ 1,587 $ 1,624
XML 20 R8.htm IDEA: XBRL DOCUMENT v3.19.2
Basis of Presentation
6 Months Ended
Jun. 30, 2019
Basis of Presentation [Abstract]  
Basis of Presentation
1.  Basis of Presentation
 
The interim financial statements are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of results for such periods.  Because the financial statements cover an interim period, they do not include all disclosures and notes normally provided in annual financial statements, and therefore, should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
 
Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

XML 21 R9.htm IDEA: XBRL DOCUMENT v3.19.2
Accounts Receivable and Contract Assets
6 Months Ended
Jun. 30, 2019
Accounts Receivable and Contract Assets [Abstract]  
Accounts Receivable and Contract Assets
2.  Accounts Receivable and Contract Assets

Accounts receivable and contract assets are summarized in the following table:

  
As of
Jun. 30, 2019
  
As of
Dec. 31, 2018
  
Change
 
 
Accounts receivable – customers
 
$
4,632
  
$
4,731
  
$
(99
)
Other receivables
  
186
   
385
   
(199
)
   
4,818
   
5,116
   
(298
)
Less: allowance for doubtful accounts
  
(343
)
  
(305
)
  
(38
)
Accounts receivable, net
 
$
4,475
  
$
4,811
  
$
(336
)
             
Unbilled revenue
 
$
2,274
  
$
2,427
  
$
(153
)

Differences in timing of revenue recognition, billings, and cash collections result in receivables and contract assets.  Generally, billing occurs subsequent to revenue recognition, resulting in a contract asset reported as unbilled revenue on the balance sheet.  The Company does not receive advances or deposits from customers before revenue is recognized so no contract liabilities are reported.  Accounts receivable are recorded when the right to consideration becomes unconditional and are presented separately on the balance sheet.  The changes in accounts receivable – customers and in unbilled revenue were primarily due to normal timing difference between performance and the customer’s payments.

XML 22 R10.htm IDEA: XBRL DOCUMENT v3.19.2
Common Stock and Earnings Per Share
6 Months Ended
Jun. 30, 2019
Common Stock and Earnings Per Share [Abstract]  
Common Stock and Earnings Per Share
3.  Common Stock and Earnings Per Share

Net income of $3,717 and $3,305 for the three months ended June 30, 2019 and 2018, respectively, and $6,530 and $5,899 for the six months ended June 30, 2019 and 2018, respectively, is used to calculate both basic and diluted earnings per share.  Basic earnings per share is based on the weighted average number of common shares outstanding.  Diluted earnings per share is based on the weighted average number of common shares outstanding plus potentially dilutive shares.  The dilutive effect of employee stock-based compensation is included in the computation of diluted earnings per share and is calculated using the treasury stock method and expected proceeds upon exercise or issuance of the stock-based compensation.

The following table summarizes the shares used in computing basic and diluted earnings per share:

  
Three Months
Ended June 30
  
Six Months
Ended June 30
 
  
2019
  
2018
  
2019
  
2018
 
             
Weighted average common shares, basic
  
12,955,656
   
12,895,687
   
12,949,036
   
12,886,154
 
Effect of dilutive securities:
                
Employee stock-based compensation
  
510
   
62
   
355
   
52
 
Weighted average common shares, diluted
  
12,956,166
   
12,895,749
   
12,949,391
   
12,886,206
 

On March 11, 2013, the Board of Directors, or the Board, authorized a share repurchase program granting the Company authority to repurchase up to 1,200,000 shares of the Company's common stock from time to time.  The stock repurchase program has no specific end date and the Company may repurchase shares in the open market or through privately negotiated transactions.  The Company may suspend or discontinue the repurchase program at any time.  No shares were repurchased during the three or six months ended June 30, 2019 and 2018.  As of June 30, 2019, 618,004 shares remain authorized for repurchase.

XML 23 R11.htm IDEA: XBRL DOCUMENT v3.19.2
Debt
6 Months Ended
Jun. 30, 2019
Debt [Abstract]  
Debt
4.  Debt

 
 
As of
Jun. 30, 2019
  
As of
Dec. 31, 2018
 
       
10.17% Senior Notes, Series A, due 2019
 
$
  
$
6,000
 
9.60% Senior Notes, Series B, due 2019
  
   
5,000
 
1.00% Pennvest Note, due 2019
  
7
   
30
 
10.05% Senior Notes, Series C, due 2020
  
6,500
   
6,500
 
8.43% Senior Notes, Series D, due 2022
  
7,500
   
7,500
 
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029
  
12,000
   
12,000
 
4.75% York County Industrial Development Authority Revenue Bonds, Series 2006, due 2036
  
10,500
   
10,500
 
4.50% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038
  
14,870
   
14,870
 
5.00% Monthly Senior Notes, Series 2010A, due 2040
  
15,000
   
15,000
 
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045
  
10,000
   
10,000
 
4.54% Senior Notes, due 2049
  
20,000
   
 
Committed Lines of Credit, due 2021
  
2,368
   
8,508
 
Total long-term debt
  
98,745
   
95,908
 
Less discount on issuance of long-term debt
  
(198
)
  
(204
)
Less unamortized debt issuance costs
  
(2,455
)
  
(2,346
)
Less current maturities
  
(7
)
  
(30
)
Long-term portion
 
$
96,085
  
$
93,328
 

On January 31, 2019, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $20,000 aggregate principal amount of the Company’s senior notes.  The senior notes bear interest at 4.54% per annum payable semiannually and mature on January 31, 2049.  The senior notes are unsecured and unsubordinated obligations of the Company.  The Company received net proceeds, after deducting issuance costs, of approximately $19,820.  The net proceeds were used to refinance the $11,000 aggregate principal amount of the Company’s 10.17% Series A Senior Notes due February 1, 2019 and the 9.60% Series B Senior Notes due February 1, 2019, and to refinance line of credit borrowings incurred by the Company as interim financing for various capital projects of the Company.

In the second quarter of 2019, the Company renewed its $13,000 and $11,000 committed lines of credit and extended the maturity date of each to May 2021, and it renewed its $7,500 committed line of credit and extended the maturity date to June 2021.

XML 24 R12.htm IDEA: XBRL DOCUMENT v3.19.2
Interest Rate Swap Agreement
6 Months Ended
Jun. 30, 2019
Interest Rate Swap Agreement [Abstract]  
Interest Rate Swap Agreement
5.  Interest Rate Swap Agreement

The Company is exposed to certain risks relating to its ongoing business operations.  The primary risk managed by using derivative instruments is interest rate risk.  The Company utilizes an interest rate swap agreement to effectively convert the Company's $12,000 variable-rate debt issue to a fixed rate.  Interest rate swaps are contracts in which a series of interest rate cash flows are exchanged over a prescribed period.  The notional amount on which the interest payments are based ($12,000) is not exchanged.  The interest rate swap provides that the Company pays the counterparty a fixed interest rate of 3.16% on the notional amount of $12,000.  In exchange, the counterparty pays the Company a variable interest rate based on 59% of the U.S. Dollar one-month LIBOR rate on the notional amount.  The intent is for the variable rate received from the swap counterparty to approximate the variable rate the Company pays to bondholders on its variable rate debt issue, resulting in a fixed rate being paid to the swap counterparty and reducing the Company's interest rate risk.  The Company’s net payment rate on the swap was 1.71% and 1.97% during the three months ended June 30, 2019 and 2018, respectively, and 1.68% and 2.08% for the six months ended June 30, 2019 and 2018, respectively.
 
The interest rate swap agreement is classified as a financial derivative used for non-trading activities.  The accounting standards regarding accounting for derivatives and hedging activities require companies to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet.  In accordance with the standards, the interest rate swap is recorded on the balance sheet in other deferred credits at fair value (see Note 6).

The Company uses regulatory accounting treatment rather than hedge accounting to defer the unrealized gains and losses on its interest rate swap.  These unrealized gains and losses are recorded as a regulatory asset.  Based on current ratemaking treatment, the Company expects the unrealized gains and losses to be recognized in rates as a component of interest expense as the swap settlements occur.  Swap settlements are recorded in the income statement with the hedged item as interest expense.  Swap settlements resulted in the reclassification from regulatory assets to interest expense of $51 and $60 during the three months ended June 30, 2019 and 2018, respectively, and $101 and $125 during the six months ended June 30, 2019 and 2018, respectively. The overall swap result was a (gain) loss of $242 and $(90) for the three months ended June 30, 2019 and 2018, respectively, and $486 and $(347) for the six months ended June 30, 2019 and 2018, respectively. The Company expects to reclassify $252 from regulatory assets to interest expense as a result of swap settlements over the next 12 months.
 
The interest rate swap agreement contains provisions that require the Company to maintain a credit rating of at least BBB- with Standard & Poor's.  If the Company's rating were to fall below this rating, it would be in violation of these provisions, and the counterparty to the derivative could request immediate payment if the derivative was in a liability position.  On April 5, 2019, Standard & Poor's affirmed the Company's credit rating at A-, with a stable outlook and adequate liquidity.  The Company's interest rate swap was in a liability position as of June 30, 2019.  If a violation due to credit rating, or some other default provision, were triggered on June 30, 2019, the Company would have been required to pay the counterparty approximately $2,351.
 
The interest rate swap will expire on October 1, 2029.  Other than the interest rate swap, the Company has no other derivative instruments.
 
XML 25 R13.htm IDEA: XBRL DOCUMENT v3.19.2
Fair Value Measurements
6 Months Ended
Jun. 30, 2019
Fair Value Measurements [Abstract]  
Fair Value Measurements
6.  Fair Value Measurements
 
The accounting standards regarding fair value measurements establish a fair value hierarchy which indicates the extent to which inputs used in measuring fair value are observable in the market.  Level 1 inputs include quoted prices for identical instruments and are the most observable.  Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, commodity rates and yield curves.  Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability.

The Company has recorded its interest rate swap liability at fair value in accordance with the standards.  The liability is recorded under the caption “Other deferred credits” on the balance sheet.  The table below illustrates the fair value of the interest rate swap as of the end of the reporting period.
 
Description
 
June 30, 2019
 
Fair Value Measurements
at Reporting Date Using
Significant Other Observable Inputs (Level 2)
Interest Rate Swap
 
$2,200
 
$2,200
 
Fair values are measured as the present value of all expected future cash flows based on the LIBOR-based swap yield curve as of the date of the valuation.  These inputs to this calculation are deemed to be Level 2 inputs.  The balance sheet carrying value reflects the Company's credit quality as of June 30, 2019.  The rate used in discounting all prospective cash flows anticipated to be made under this swap reflects a representation of the yield to maturity for 30-year debt on utilities rated A- as of June 30, 2019.  The use of the Company's credit rating resulted in a reduction in the fair value of the swap liability of $151 as of June 30, 2019.  The fair value of the swap reflecting the Company's credit quality as of December 31, 2018 is shown in the table below.
 
Description
 
December 31, 2018
 
Fair Value Measurements
at Reporting Date Using
Significant Other Observable Inputs (Level 2)
Interest Rate Swap
 
$1,815
 
$1,815
 
The carrying amount of current assets and liabilities that are considered financial instruments approximates fair value as of the dates presented.  The Company's total long-term debt, with a carrying value of $98,745 at June 30, 2019, and $95,908 at December 31, 2018, had an estimated fair value of approximately $116,000 and $105,000, respectively.  The estimated fair value of debt was calculated using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration and risk profile.  These inputs to this calculation are deemed to be Level 2 inputs.  The Company recognized its credit rating in determining the yield curve, and did not factor in third party credit enhancements including bond insurance on the 2006 York County Industrial Development Authority issue and the letter of credit on the 2008 Pennsylvania Economic Development Financing Authority Series A issue.

Customers' advances for construction and note receivable had carrying values at June 30, 2019 of $7,934 and $255, respectively.  At December 31, 2018, customers' advances for construction and note receivable had carrying values of $6,849 and $255, respectively.  The relative fair values of these amounts cannot be accurately estimated since the timing of future payment streams is dependent upon several factors, including new customer connections, customer consumption levels and future rate increases.

XML 26 R14.htm IDEA: XBRL DOCUMENT v3.19.2
Commitments
6 Months Ended
Jun. 30, 2019
Commitments [Abstract]  
Commitments
7.  Commitments

The Company entered into a consent order agreement with the Pennsylvania Department of Environmental Protection in December 2016 after the Company determined it exceeded the action level for lead as established by the Lead and Copper Rule, or LCR, issued by the U.S. Environmental Protection Agency.  The Company did not have an exceedance in any subsequent compliance test.  Under the agreement, the Company committed to exceed the LCR replacement schedule by replacing all of the remaining known company-owned lead service lines within four years from the agreement.  The cost for these service line replacements was approximately $2,466 and $2,341 through June 30, 2019 and December 31, 2018, respectively, and is included in utility plant.  As of June 30, 2019, all known company-owned lead service lines have been replaced.  Any additional company-owned lead service lines that are discovered will be replaced but are not expected to have a material impact on the financial position of the Company.

The Company was granted approval by the Pennsylvania Public Utility Commission, or PPUC, to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the agreement.  The tariff modification allows the Company to replace customer-owned service lines at its own initial cost.  The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period.  The cost for the customer-owned lead service line replacements was approximately $474 and $304 through June 30, 2019 and December 31, 2018, respectively, and is included as a regulatory asset.  Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $910.  This estimate is subject to adjustment as more facts become available.

XML 27 R15.htm IDEA: XBRL DOCUMENT v3.19.2
Revenue
6 Months Ended
Jun. 30, 2019
Revenue [Abstract]  
Revenue
8.  Revenue

The following table shows the Company’s revenues disaggregated by service and customer type.

 
 
Three Months
Ended June 30
  
Six Months
Ended June 30
 
 
 
2019
  
2018
  
2019
  
2018
 
Water utility service
            
Residential
 
$
8,142
  
$
7,453
  
$
15,600
  
$
14,771
 
Commercial and industrial
  
3,603
   
3,361
   
6,766
   
6,495
 
Fire protection
  
776
   
721
   
1,510
   
1,434
 
Wastewater utility service
                
Residential
  
291
   
263
   
544
   
510
 
Commercial and industrial
  
71
   
64
   
131
   
125
 
Billing and revenue collection services
  
19
   
16
   
37
   
32
 
Collection services
  
15
   
14
   
32
   
32
 
Other revenue
  
4
   
4
   
7
   
12
 
Total Revenue from Contracts with Customers
  
12,921
   
11,896
   
24,627
   
23,411
 
Rents from regulated property
  
127
   
130
   
252
   
259
 
Total Operating Revenue
 
$
13,048
  
$
12,026
  
$
24,879
  
$
23,670
 

Utility Service
The Company provides utility service as a distinct and single performance obligation to each of its water and wastewater customers.  The transaction price is detailed in the tariff pursuant to an order by the PPUC and made publicly available.  There is no variable consideration and no free service, special rates, or subnormal charges to any customer.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of utility service through a stand-ready obligation to perform and the transfer of water or the collection of wastewater through a series of distinct transactions that are identical in nature and have the same pattern of transfer to the customer.  The Company uses an output method to recognize the utility service revenue over time.  The stand-ready obligation is recognized through the passage of time in the form of a fixed charge and the transfer of water or the collection of wastewater is recognized at a per unit rate based on the actual or estimated flow through the meter.  Each customer is invoiced every month and the invoice is due within twenty days.  The utility service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for the passage of time and the actual or estimated usage from the latest meter reading to the end of the accounting period.  The methodology is standardized and consistently applied to reduce bias and the need for judgment.

Billing and Revenue Collection Service
The Company provides billing and revenue collection service as distinct performance obligations to four municipalities within the service territory of the Company.  The municipalities provide wastewater service to their residents and the Company acts as the billing and revenue collection agent for the municipalities.  The transaction price is a fixed amount per bill prepared as established in the contract.  There is no variable consideration.  Due to the fact that both the billing performance obligation and the revenue collection performance obligation are materially complete by the end of the reporting period, the Company does not allocate the transaction price between the two performance obligations.  The performance obligations are satisfied at a point in time when the bills are sent as the municipalities receive all the benefits and bears all of the risk of non-collection at that time.  Each municipality is invoiced when the bills are complete and the invoice is due within thirty days.  The billing and revenue collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.

Collection Service
The Company provides collection service as a distinct and single performance obligation to several municipalities within the service territory of the Company.  The municipalities provide wastewater service to their residents.  If those residents are delinquent in paying for their wastewater service, the municipalities request that the Company post for and shut off the supply of water to the premises of those residents.  When the resident is no longer delinquent, the Company will restore water service to the premises.  The transaction price for each posting, each shut off, and each restoration is a fixed amount as established in the contract.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied at a point in time when the posting, shut off, or restoration is completed as the municipalities receive all the benefits in the form of payment or no longer providing wastewater service.  Each municipality is invoiced periodically for the posting, shut offs, and restorations that have been completed since the last billing and the invoice is due within thirty days.  The collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for postings, shut offs, and restorations that have been completed from the last billing to the end of the accounting period.

Service Line Protection Plan
The Company provides service line protection as a distinct and single performance obligation to current water customers that choose to participate.  The transaction price is detailed in the plan’s terms and conditions and made publicly available.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of service line protection through a stand-ready obligation to perform.  The Company uses an output method to recognize the service line protection revenue over time.  The stand-ready obligation is recognized through the passage of time.  A customer has a choice to prepay for an entire year or to pay in advance each month.  The service line protection plan has no returns or extended warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no material performance obligations remain unsatisfied as of the end of the reporting period.

XML 28 R16.htm IDEA: XBRL DOCUMENT v3.19.2
Rate Matters
6 Months Ended
Jun. 30, 2019
Rate Matters [Abstract]  
Rate Matters
9.  Rate Matters
 
From time to time, the Company files applications for rate increases with the PPUC and is granted rate relief as a result of such requests.  The most recent rate request was filed by the Company on May 30, 2018, and sought an annual increase in water rates of $6,399 and an annual increase in wastewater rates of $289.  Effective March 1, 2019, the PPUC authorized an increase in water rates designed to produce approximately $3,361 in additional annual revenues and an increase in wastewater rates designed to produce approximately $289 in additional annual revenues.

As part of a rate order approved by the PPUC, the Company has agreed to return $2,117 to customers as a reconcilable negative surcharge on their bills generated from March 2019 through February 2020 for the benefit of the lower tax rate effective January 1, 2018 resulting from the enactment of the Tax Cuts and Jobs Act of 2017, or 2017 Tax Act.  During the three and six months ended June 30, 2019, the Company increased its regulatory liability by reducing revenue by $21 and $305, respectively, including the gross-up of revenue necessary to return, in rates, the effect of this temporary tax difference, and reclassified $0 and $27, respectively, from excess accumulated deferred income taxes on accelerated depreciation recorded at December 31, 2017.  During the three and six months ended June 30, 2019 and 2018, the Company returned negative surcharges of $541 and $798, respectively.

The PPUC permits water utilities to collect a distribution system improvement charge, or DSIC.  The DSIC allows the Company to add a charge to customers' bills for qualified replacement costs of certain infrastructure without submitting a rate filing.  This surcharge mechanism typically adjusts periodically based on additional qualified capital expenditures completed or anticipated in a future period.  The DSIC is capped at 5% of base rates, and is reset to zero when new base rates that reflect the costs of those additions become effective or when a utility's earnings exceed a regulatory benchmark. The DSIC reset to zero when the new base rates took effect March 1, 2019. The DSIC provided revenues of $0 and $436 for the three months ended June 30, 2019 and 2018, respectively, and $249 and $916 for the six months ended June 30, 2019 and 2018, respectively.

XML 29 R17.htm IDEA: XBRL DOCUMENT v3.19.2
Pensions
6 Months Ended
Jun. 30, 2019
Pensions [Abstract]  
Pensions
10.  Pensions
 
Components of Net Periodic Pension Cost

 
 
Three Months
Ended June 30
  
Six Months
Ended June 30
 
 
 
2019
  
2018
  
2019
  
2018
 
 
            
Service cost
 
$
212
  
$
254
  
$
424
  
$
508
 
Interest cost
  
411
   
379
   
822
   
758
 
Expected return on plan assets
  
(683
)
  
(698
)
  
(1,366
)
  
(1,396
)
Amortization of actuarial loss
  
105
   
102
   
210
   
203
 
Amortization of prior service cost
  
(3
)
  
(4
)
  
(6
)
  
(7
)
Rate-regulated adjustment
  
533
   
542
   
1,066
   
1,084
 
Net periodic pension expense
 
$
575
  
$
575
  
$
1,150
  
$
1,150
 

Pension service cost is recorded in operating expenses.  All other components of net periodic pension cost are recorded as other pension costs in other income (expenses).

Employer Contributions
 
The Company previously disclosed in its financial statements for the year ended December 31, 2018 that it expected to contribute $2,300 to its pension plans in 2019.  For the six months ended June 30, 2019, contributions of $1,150 have been made.  The Company expects to contribute the remaining $1,150 during the final two quarters of 2019.

XML 30 R18.htm IDEA: XBRL DOCUMENT v3.19.2
Stock-Based Compensation
6 Months Ended
Jun. 30, 2019
Stock-Based Compensation [Abstract]  
Stock-Based Compensation
11.  Stock-Based Compensation

On May 2, 2016, the Company’s stockholders approved The York Water Company Long-Term Incentive Plan, or LTIP.  The LTIP was adopted to provide the incentive of long-term stock-based awards to officers, directors and key employees. The LTIP provides for the granting of nonqualified stock options, incentive stock options, stock appreciation rights, performance restricted stock grants and units, restricted stock grants and units, and unrestricted stock grants.  A maximum of 100,000 shares of common stock may be issued under the LTIP over the ten-year life of the plan.  The maximum number of shares of common stock subject to awards that may be granted to any participant in any one calendar year is 2,000.  Shares of common stock issued under the LTIP may be treasury shares or authorized but unissued shares.  The LTIP will be administered by the Compensation Committee of the Board, or the full Board, provided that the full Board will administer the LTIP as it relates to awards to non-employee directors of the Company.  The Company filed a registration statement with the Securities and Exchange Commission on May 11, 2016 covering the offering of stock under the LTIP.  The LTIP was effective on July 1, 2016.

On November 20, 2018, the Board accelerated the vesting period for restricted stock granted in 2016, 2017, and 2018 to one retiring officer from three years to that officer’s 2019 retirement date, which had been fully recognized as of March 31, 2019.
  
On May 6, 2019, the Board awarded stock to non-employee directors effective May 6, 2019.  This stock award vested immediately.  On May 6, 2019, the Compensation Committee awarded restricted stock to officers and key employees effective May 6, 2019.  This restricted stock award vests ratably over three years beginning May 6, 2019. 

The restricted stock awards provide the grantee with the rights of a shareholder, including the right to receive dividends and to vote such shares, but not the right to sell or otherwise transfer the shares during the restriction period.  As a result, the awards are included in common shares outstanding on the balance sheet.  Restricted stock awards result in compensation expense valued at the fair market value of the stock on the date of the grant and are amortized ratably over the restriction period.

The following tables summarize the stock grant amounts and activity for the six months ended June 30, 2019.

  
Number of Shares
  
Grant Date Weighted
Average Fair Value
 
Nonvested at beginning of the period
  
3,080
  
$
33.85
 
Granted
  
6,963
  $
33.61
 
Vested
  
(2,556
)
 $
33.80
 
Forfeited
  
   
 
Nonvested at end of the period
  
7,487
  
$
33.64
 

For the three months ended June 30, 2019 and 2018, the statement of income includes $65 and $53 of stock-based compensation, respectively, and related recognized tax benefits of $19 and $15, respectively. For the six months ended June 30, 2019 and 2018, the statement of income includes $79 and $57 of stock-based compensation, respectively, and related recognized tax benefits of $23 and $16, respectively. The total fair value of the shares vested in the six months ended June 30, 2019 was $86. Total stock-based compensation related to nonvested awards not yet recognized is $252 which will be recognized over the remaining three year vesting period.

XML 31 R19.htm IDEA: XBRL DOCUMENT v3.19.2
Income Taxes
6 Months Ended
Jun. 30, 2019
Income Taxes [Abstract]  
Income Taxes
12.  Income Taxes

The Company filed for a change in accounting method under the Internal Revenue Service tangible property regulations, or TPR, effective in 2014.  Under the change in accounting method, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return.  This ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable.  It also results in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.

The Company’s effective tax rate was 15.2% and 7.6% for the three months ended June 30, 2019 and 2018, respectively, and 17.3% and 16.2% for the six months ended June 30, 2019 and 2018, respectively.  The effective tax rate is higher for the three and six months ended June 30, 2019 compared to 2018, primarily due to a lower level of eligible asset improvements that were placed into service and higher state income taxes.  The effective tax rate will vary depending on the level of eligible asset improvements expensed for tax purposes under TPR each period.

XML 32 R20.htm IDEA: XBRL DOCUMENT v3.19.2
Impact of Recent Accounting Pronouncements
6 Months Ended
Jun. 30, 2019
Impact of Recent Accounting Pronouncements [Abstract]  
Impact of Recent Accounting Pronouncements
13.  Impact of Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-02, Leases (Topic 842), which replaces the existing guidance in Accounting Standard Codification 840 – Leases.  This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases.  Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability.  For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense.  This ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years.  The Company adopted the standard on January 1, 2019.  The Company did not identify any material leases under this standard, and therefore the adoption did not have a material effect on its financial position, results of operations or cash flows.

XML 33 R21.htm IDEA: XBRL DOCUMENT v3.19.2
Impact of Recent Accounting Pronouncements (Policies)
6 Months Ended
Jun. 30, 2019
Impact of Recent Accounting Pronouncements [Abstract]  
Impact of Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-02, Leases (Topic 842), which replaces the existing guidance in Accounting Standard Codification 840 – Leases.  This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases.  Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability.  For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense.  This ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years.  The Company adopted the standard on January 1, 2019.  The Company did not identify any material leases under this standard, and therefore the adoption did not have a material effect on its financial position, results of operations or cash flows.

XML 34 R22.htm IDEA: XBRL DOCUMENT v3.19.2
Accounts Receivable and Contract Assets (Tables)
6 Months Ended
Jun. 30, 2019
Accounts Receivable and Contract Assets [Abstract]  
Accounts Receivable and Contract Assets
Accounts receivable and contract assets are summarized in the following table:

  
As of
Jun. 30, 2019
  
As of
Dec. 31, 2018
  
Change
 
 
Accounts receivable – customers
 
$
4,632
  
$
4,731
  
$
(99
)
Other receivables
  
186
   
385
   
(199
)
   
4,818
   
5,116
   
(298
)
Less: allowance for doubtful accounts
  
(343
)
  
(305
)
  
(38
)
Accounts receivable, net
 
$
4,475
  
$
4,811
  
$
(336
)
             
Unbilled revenue
 
$
2,274
  
$
2,427
  
$
(153
)

XML 35 R23.htm IDEA: XBRL DOCUMENT v3.19.2
Common Stock and Earnings Per Share (Tables)
6 Months Ended
Jun. 30, 2019
Common Stock and Earnings Per Share [Abstract]  
Shares Used in Computing Basic and Diluted Earnings per Share
  
Three Months
Ended June 30
  
Six Months
Ended June 30
 
  
2019
  
2018
  
2019
  
2018
 
             
Weighted average common shares, basic
  
12,955,656
   
12,895,687
   
12,949,036
   
12,886,154
 
Effect of dilutive securities:
                
Employee stock-based compensation
  
510
   
62
   
355
   
52
 
Weighted average common shares, diluted
  
12,956,166
   
12,895,749
   
12,949,391
   
12,886,206
 

XML 36 R24.htm IDEA: XBRL DOCUMENT v3.19.2
Debt (Tables)
6 Months Ended
Jun. 30, 2019
Debt [Abstract]  
Debt
 
 
As of
Jun. 30, 2019
  
As of
Dec. 31, 2018
 
       
10.17% Senior Notes, Series A, due 2019
 
$
  
$
6,000
 
9.60% Senior Notes, Series B, due 2019
  
   
5,000
 
1.00% Pennvest Note, due 2019
  
7
   
30
 
10.05% Senior Notes, Series C, due 2020
  
6,500
   
6,500
 
8.43% Senior Notes, Series D, due 2022
  
7,500
   
7,500
 
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029
  
12,000
   
12,000
 
4.75% York County Industrial Development Authority Revenue Bonds, Series 2006, due 2036
  
10,500
   
10,500
 
4.50% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038
  
14,870
   
14,870
 
5.00% Monthly Senior Notes, Series 2010A, due 2040
  
15,000
   
15,000
 
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045
  
10,000
   
10,000
 
4.54% Senior Notes, due 2049
  
20,000
   
 
Committed Lines of Credit, due 2021
  
2,368
   
8,508
 
Total long-term debt
  
98,745
   
95,908
 
Less discount on issuance of long-term debt
  
(198
)
  
(204
)
Less unamortized debt issuance costs
  
(2,455
)
  
(2,346
)
Less current maturities
  
(7
)
  
(30
)
Long-term portion
 
$
96,085
  
$
93,328
 

XML 37 R25.htm IDEA: XBRL DOCUMENT v3.19.2
Fair Value Measurements (Tables)
6 Months Ended
Jun. 30, 2019
Fair Value Measurements [Abstract]  
Fair Value of Interest Rate Swap
The Company has recorded its interest rate swap liability at fair value in accordance with the standards.  The liability is recorded under the caption “Other deferred credits” on the balance sheet.  The table below illustrates the fair value of the interest rate swap as of the end of the reporting period.
 
Description
 
June 30, 2019
 
Fair Value Measurements
at Reporting Date Using
Significant Other Observable Inputs (Level 2)
Interest Rate Swap
 
$2,200
 
$2,200
 
Fair values are measured as the present value of all expected future cash flows based on the LIBOR-based swap yield curve as of the date of the valuation.  These inputs to this calculation are deemed to be Level 2 inputs.  The balance sheet carrying value reflects the Company's credit quality as of June 30, 2019.  The rate used in discounting all prospective cash flows anticipated to be made under this swap reflects a representation of the yield to maturity for 30-year debt on utilities rated A- as of June 30, 2019.  The use of the Company's credit rating resulted in a reduction in the fair value of the swap liability of $151 as of June 30, 2019.  The fair value of the swap reflecting the Company's credit quality as of December 31, 2018 is shown in the table below.
 
Description
 
December 31, 2018
 
Fair Value Measurements
at Reporting Date Using
Significant Other Observable Inputs (Level 2)
Interest Rate Swap
 
$1,815
 
$1,815
 
XML 38 R26.htm IDEA: XBRL DOCUMENT v3.19.2
Revenue (Tables)
6 Months Ended
Jun. 30, 2019
Revenue [Abstract]  
Revenues Disaggregated by Service and Customer Type
The following table shows the Company’s revenues disaggregated by service and customer type.

 
 
Three Months
Ended June 30
  
Six Months
Ended June 30
 
 
 
2019
  
2018
  
2019
  
2018
 
Water utility service
            
Residential
 
$
8,142
  
$
7,453
  
$
15,600
  
$
14,771
 
Commercial and industrial
  
3,603
   
3,361
   
6,766
   
6,495
 
Fire protection
  
776
   
721
   
1,510
   
1,434
 
Wastewater utility service
                
Residential
  
291
   
263
   
544
   
510
 
Commercial and industrial
  
71
   
64
   
131
   
125
 
Billing and revenue collection services
  
19
   
16
   
37
   
32
 
Collection services
  
15
   
14
   
32
   
32
 
Other revenue
  
4
   
4
   
7
   
12
 
Total Revenue from Contracts with Customers
  
12,921
   
11,896
   
24,627
   
23,411
 
Rents from regulated property
  
127
   
130
   
252
   
259
 
Total Operating Revenue
 
$
13,048
  
$
12,026
  
$
24,879
  
$
23,670
 

XML 39 R27.htm IDEA: XBRL DOCUMENT v3.19.2
Pensions (Tables)
6 Months Ended
Jun. 30, 2019
Pensions [Abstract]  
Components of Net Periodic Pension Cost
Components of Net Periodic Pension Cost

 
 
Three Months
Ended June 30
  
Six Months
Ended June 30
 
 
 
2019
  
2018
  
2019
  
2018
 
 
            
Service cost
 
$
212
  
$
254
  
$
424
  
$
508
 
Interest cost
  
411
   
379
   
822
   
758
 
Expected return on plan assets
  
(683
)
  
(698
)
  
(1,366
)
  
(1,396
)
Amortization of actuarial loss
  
105
   
102
   
210
   
203
 
Amortization of prior service cost
  
(3
)
  
(4
)
  
(6
)
  
(7
)
Rate-regulated adjustment
  
533
   
542
   
1,066
   
1,084
 
Net periodic pension expense
 
$
575
  
$
575
  
$
1,150
  
$
1,150
 

XML 40 R28.htm IDEA: XBRL DOCUMENT v3.19.2
Stock Based Compensation (Tables)
6 Months Ended
Jun. 30, 2019
Stock-Based Compensation [Abstract]  
Restricted Stock
The following tables summarize the stock grant amounts and activity for the six months ended June 30, 2019.

  
Number of Shares
  
Grant Date Weighted
Average Fair Value
 
Nonvested at beginning of the period
  
3,080
  
$
33.85
 
Granted
  
6,963
  $
33.61
 
Vested
  
(2,556
)
 $
33.80
 
Forfeited
  
   
 
Nonvested at end of the period
  
7,487
  
$
33.64
 

XML 41 R29.htm IDEA: XBRL DOCUMENT v3.19.2
Accounts Receivable and Contract Assets (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Accounts Receivable and Contract Assets [Abstract]    
Accounts receivable - customers $ 4,632 $ 4,731
Other receivables 186 385
Accounts receivable 4,818 5,116
Less: allowance for doubtful accounts (343) (305)
Accounts receivable, net 4,475 4,811
Unbilled revenue 2,274 $ 2,427
Change in accounts receivable - customers (99)  
Change in other receivables (199)  
Change in accounts receivable (298)  
Change in allowance for doubtful accounts (38)  
Change in accounts receivable, net (336)  
Change in unbilled revenue $ (153)  
XML 42 R30.htm IDEA: XBRL DOCUMENT v3.19.2
Common Stock and Earnings Per Share (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Mar. 11, 2013
Common Stock and Earnings Per Share [Abstract]          
Net income $ 3,717 $ 3,305 $ 6,530 $ 5,899  
Shares Used in Computing Basic and Diluted Earnings per Share [Abstract]          
Weighted average common shares, basic (in shares) 12,955,656 12,895,687 12,949,036 12,886,154  
Effect of dilutive securities [Abstract]          
Employee stock-based compensation (in shares) 510 62 355 52  
Weighted average common shares, diluted (in shares) 12,956,166 12,895,749 12,949,391 12,886,206  
Stock Repurchase Program [Abstract]          
Number of shares authorized to be repurchased under the stock repurchase program (in shares)         1,200,000
Number of shares repurchased under the stock repurchase program (in shares) 0 0 0 0  
Number of remaining shares authorized to be repurchased under the stock repurchase program (in shares) 618,004   618,004    
XML 43 R31.htm IDEA: XBRL DOCUMENT v3.19.2
Debt (Details) - USD ($)
$ in Thousands
6 Months Ended
Jan. 31, 2019
Jun. 30, 2019
Dec. 31, 2018
Debt [Abstract]      
Total long-term debt   $ 98,745 $ 95,908
Less discount on issuance of long-term debt   (198) (204)
Less unamortized debt issuance costs   (2,455) (2,346)
Less current maturities   (7) (30)
Long-term portion   96,085 93,328
10.17% Series A Senior Notes and 9.60% Series B Senior Notes [Member]      
Debt [Abstract]      
Face value $ 11,000    
10.17% Senior Notes, Series A, due 2019 [Member]      
Debt [Abstract]      
Total long-term debt   $ 0 6,000
Interest rate   10.17%  
Maturity date   Feb. 01, 2019  
9.60% Senior Notes, Series B, due 2019 [Member]      
Debt [Abstract]      
Total long-term debt   $ 0 5,000
Interest rate   9.60%  
Maturity date   Feb. 01, 2019  
1.00% Pennvest Note, due 2019 [Member]      
Debt [Abstract]      
Total long-term debt   $ 7 30
Interest rate   1.00%  
10.05% Senior Notes, Series C, due 2020 [Member]      
Debt [Abstract]      
Total long-term debt   $ 6,500 6,500
Interest rate   10.05%  
8.43% Senior Notes, Series D, due 2022 [Member]      
Debt [Abstract]      
Total long-term debt   $ 7,500 7,500
Interest rate   8.43%  
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029 [Member]      
Debt [Abstract]      
Total long-term debt   $ 12,000 12,000
4.75% York County Industrial Development Authority Revenue Bonds, Series 2006, due 2036 [Member]      
Debt [Abstract]      
Total long-term debt   $ 10,500 10,500
Interest rate   4.75%  
4.50% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038 [Member]      
Debt [Abstract]      
Total long-term debt   $ 14,870 14,870
Interest rate   4.50%  
5.00% Monthly Senior Notes, Series 2010A, due 2040 [Member]      
Debt [Abstract]      
Total long-term debt   $ 15,000 15,000
Interest rate   5.00%  
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045 [Member]      
Debt [Abstract]      
Total long-term debt   $ 10,000 10,000
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045 [Member] | Minimum [Member]      
Debt [Abstract]      
Interest rate   4.00%  
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045 [Member] | Maximum [Member]      
Debt [Abstract]      
Interest rate   4.50%  
4.54% Senior Notes, due 2049 [Member]      
Debt [Abstract]      
Total long-term debt   $ 20,000 0
Face value 20,000    
Interest rate   4.54%  
Maturity date   Jan. 31, 2049  
Proceeds from debt, net of issuance costs $ 19,820    
Committed Lines of Credit, due 2021 [Member]      
Debt [Abstract]      
Total long-term debt   $ 2,368 $ 8,508
First Line of Credit [Member]      
Debt [Abstract]      
Maturity date   May 31, 2021  
Renewed line of credit   $ 13,000  
Second Line of Credit [Member]      
Debt [Abstract]      
Maturity date   May 31, 2021  
Renewed line of credit   $ 11,000  
Third Line of Credit [Member]      
Debt [Abstract]      
Maturity date   Jun. 30, 2021  
Renewed line of credit   $ 7,500  
XML 44 R32.htm IDEA: XBRL DOCUMENT v3.19.2
Interest Rate Swap Agreement (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Interest Rate Swap Agreement [Abstract]          
Long-term debt $ 98,745   $ 98,745   $ 95,908
Interest Rate Swap [Member]          
Interest Rate Swap Agreement [Abstract]          
Notional amount of swap $ 12,000   $ 12,000    
Fixed interest rate 3.16%   3.16%    
Net payment rate on swap 1.71% 1.97% 1.68% 2.08%  
Interest rate swap settlements reclassified from regulatory assets to interest expense $ 51 $ 60 $ 101 $ 125  
Overall interest rate swap (gain) loss 242 $ (90) 486 $ (347)  
Interest rate swap settlements to be reclassified during the next 12 months 252   252    
Potential payment to counterparty $ 2,351   $ 2,351    
LIBOR [Member] | Interest Rate Swap [Member]          
Interest Rate Swap Agreement [Abstract]          
Percentage of variable interest rate 59.00%   59.00%    
Term of variable rate     1 month    
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029 [Member]          
Interest Rate Swap Agreement [Abstract]          
Long-term debt $ 12,000   $ 12,000   $ 12,000
XML 45 R33.htm IDEA: XBRL DOCUMENT v3.19.2
Fair Value Measurements (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Interest Rate Swap [Abstract]    
Term of debt on utilities rated A- used to discount prospective cash flows 30 years  
Reduction in fair value of swap liability $ 151  
Fair Value Measurements [Abstract]    
Customers' advances for construction 7,934 $ 6,849
Note receivable 255 255
Fair Value on a Recurring Basis [Member]    
Interest Rate Swap [Abstract]    
Interest rate swap 2,200 1,815
Fair Value on a Recurring Basis [Member] | Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2) [Member]    
Interest Rate Swap [Abstract]    
Interest rate swap 2,200 1,815
Carrying Amount [Member]    
Fair Value, Financial Liabilities [Abstract]    
Total long-term debt 98,745 95,908
Estimated Fair Value [Member]    
Fair Value, Financial Liabilities [Abstract]    
Total long-term debt $ 116,000 $ 105,000
XML 46 R34.htm IDEA: XBRL DOCUMENT v3.19.2
Commitments (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2019
USD ($)
ServiceLine
Dec. 31, 2018
USD ($)
Company-Owned Lead Service Lines [Member]    
Commitments [Abstract]    
Term to replace all remaining company-owned lead service lines 4 years  
Costs incurred to replace company-owned lead service lines $ 2,466 $ 2,341
Customer-Owned Lead Service Lines [Member]    
Commitments [Abstract]    
Number of lead customer-owned service lines to be replaced annually | ServiceLine 400  
Term of tariff modification to replace customer-owned lead service lines 9 years  
Recovery period of regulatory asset 4 years  
Costs incurred to replace customer-owned lead service lines $ 474 $ 304
Costs to be incurred to replace customer-owned lead service lines $ 910  
XML 47 R35.htm IDEA: XBRL DOCUMENT v3.19.2
Revenue (Details)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
USD ($)
Jun. 30, 2018
USD ($)
Jun. 30, 2019
USD ($)
Municipality
Jun. 30, 2018
USD ($)
Revenue [Abstract]        
Revenue from contracts with customers $ 12,921 $ 11,896 $ 24,627 $ 23,411
Rents from regulated property 127 130 252 259
Total operating revenue 13,048 12,026 $ 24,879 23,670
Utility Service [Member]        
Revenue [Abstract]        
Number of days for customer to make payment after being invoiced     20 days  
Water Utility Service [Member] | Residential [Member]        
Revenue [Abstract]        
Revenue from contracts with customers 8,142 7,453 $ 15,600 14,771
Water Utility Service [Member] | Commercial and Industrial [Member]        
Revenue [Abstract]        
Revenue from contracts with customers 3,603 3,361 6,766 6,495
Water Utility Service [Member] | Fire Protection [Member]        
Revenue [Abstract]        
Revenue from contracts with customers 776 721 1,510 1,434
Wastewater Utility Service [Member] | Residential [Member]        
Revenue [Abstract]        
Revenue from contracts with customers 291 263 544 510
Wastewater Utility Service [Member] | Commercial and Industrial [Member]        
Revenue [Abstract]        
Revenue from contracts with customers 71 64 131 125
Billing and Revenue Collection Services [Member]        
Revenue [Abstract]        
Revenue from contracts with customers 19 16 $ 37 32
Number of municipalities within the service territory provided service | Municipality     4  
Number of days for customer to make payment after being invoiced     30 days  
Collection Services [Member]        
Revenue [Abstract]        
Revenue from contracts with customers 15 14 $ 32 32
Number of days for customer to make payment after being invoiced     30 days  
Other Revenue [Member]        
Revenue [Abstract]        
Revenue from contracts with customers $ 4 $ 4 $ 7 $ 12
XML 48 R36.htm IDEA: XBRL DOCUMENT v3.19.2
Rate Matters (Details) - PPUC [Member] - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Rate Matters [Abstract]        
Amount agreed to be returned to customers for effects of 2017 Tax Act $ 2,117   $ 2,117  
Revenue recorded as regulatory liability for effects of 2017 Tax Act (21)   (305)  
Reclassification from excess accumulated deferred income taxes on accelerated depreciation 0   27  
Negative surcharges returned to customers for effects of 2017 Tax Act 541   798  
Rate Request Filed on May 30, 2018 [Member] | Water [Member]        
Rate Matters [Abstract]        
Requested increase in annual revenue     6,399  
Authorized dollar increase in annual revenues from the PPUC     3,361  
Rate Request Filed on May 30, 2018 [Member] | Wastewater [Member]        
Rate Matters [Abstract]        
Requested increase in annual revenue     289  
Authorized dollar increase in annual revenues from the PPUC     289  
DSIC [Member]        
Rate Matters [Abstract]        
Distribution system improvement charge revenue $ 0 $ 436 $ 249 $ 916
DSIC [Member] | Maximum [Member]        
Rate Matters [Abstract]        
Distribution system improvement charge percentage over base rate     5.00%  
DSIC [Member] | Minimum [Member]        
Rate Matters [Abstract]        
Distribution system improvement charge percentage over base rate     0.00%  
XML 49 R37.htm IDEA: XBRL DOCUMENT v3.19.2
Pensions (Details) - Pension Plans [Member] - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Components of Net Periodic Pension Cost [Abstract]          
Service cost $ 212 $ 254 $ 424 $ 508  
Interest cost 411 379 822 758  
Expected return on plan assets (683) (698) (1,366) (1,396)  
Amortization of actuarial loss 105 102 210 203  
Amortization of prior service cost (3) (4) (6) (7)  
Rate-regulated adjustment 533 542 1,066 1,084  
Net periodic pension expense 575 $ 575 1,150 $ 1,150  
Employer Contributions [Abstract]          
Estimated employer contributions in 2019         $ 2,300
Contributions made by employer     1,150    
Estimated future contributions in current year $ 1,150   $ 1,150    
XML 50 R38.htm IDEA: XBRL DOCUMENT v3.19.2
Stock-Based Compensation (Details)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Nov. 20, 2018
Officer
Jun. 30, 2019
USD ($)
$ / shares
shares
Jun. 30, 2018
USD ($)
Jun. 30, 2019
USD ($)
$ / shares
shares
Jun. 30, 2018
USD ($)
May 02, 2016
shares
Stock-Based Compensation [Abstract]            
Number of retiring officers receiving accelerated vesting period | Officer 1          
LTIP [Member]            
Stock-Based Compensation [Abstract]            
Maximum number of shares of common stock that can be issued under the plan (in shares)           100,000
Term of plan       10 years    
Maximum number of shares of common stock subject to awards that may be granted to a participant per calendar year (in shares)       2,000    
LTIP [Member] | Restricted Stock [Member]            
Number of Shares [Roll Forward]            
Nonvested at beginning of the period (in shares)       3,080    
Granted (in shares)       6,963    
Vested (in shares)       (2,556)    
Forfeited (in shares)       0    
Nonvested at end of the period (in shares)   7,487   7,487    
Grant Date Weighted Average Fair Value [Abstract]            
Nonvested at beginning of the period (in dollars per share) | $ / shares       $ 33.85    
Granted (in dollars per share) | $ / shares       33.61    
Vested (in dollars per share) | $ / shares       33.80    
Forfeited (in dollars per share) | $ / shares       0    
Nonvested at end of the period (in dollars per share) | $ / shares   $ 33.64   $ 33.64    
Stock-Based Compensation Expense [Abstract]            
Stock-based compensation expense | $   $ 65 $ 53 $ 79 $ 57  
Recognized tax benefits related to stock-based compensation expense | $   19 $ 15 23 $ 16  
Fair value of vested shares | $       86    
Stock-based compensation expense not yet recognized | $   $ 252   $ 252    
Period of recognition       3 years    
LTIP [Member] | Restricted Stock [Member] | Officers and Key Employees [Member]            
Stock-Based Compensation [Abstract]            
Vesting period       3 years    
XML 51 R39.htm IDEA: XBRL DOCUMENT v3.19.2
Income Taxes (Details)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Income Taxes [Abstract]        
Effective tax rate 15.20% 7.60% 17.30% 16.20%
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