UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
For the fiscal year ended December 31, 2025
OR
For the transition period from __________ to __________
THE YORK WATER COMPANY
(Exact name of registrant as specified in its charter)
130 East Market Street, York, Pennsylvania 17401
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (717) 845-3601
Securities registered pursuant to Section 12(b) 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)
Securities registered pursuant to Section 12(g) of the Act: None
(Title of Each Class)
☐ Yes ⌧ No
☐ Yes ⌧ No
⌧ Yes ☐ No
⌧ Yes ☐ No
Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ⌧
Smaller reporting company ☒ Emerging growth company ☐
☐
☐
☐
☐
☐ Yes ⌧ No
The aggregate market value of the Common Stock, no par value, held by nonaffiliates of the registrant on June 30, 2025 was $455,682,094.
As of March 2, 2026, there were 14,448,548 shares of Common Stock, no par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Company’s 2026
Annual Meeting of Shareholders are incorporated by reference into Part I and Part III.
TABLE OF CONTENTS
Forward-Looking Statements 3
PART I
Item 1. Business 4
Item 1A. Risk Factors 7
Item 1B. Unresolved Staff Comments 7
Item 1C Cybersecurity 8
Item 2. Properties 10
Item 3. Legal Proceedings 12
Item 4. Mine Safety Disclosures 12
PART II
Item 6. Reserved 13
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 21
Item 8. Financial Statements 21
Item 9A. Controls and Procedures 53
Item 9B. Other Information 54
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 54
PART III
Item 10. Directors, Executive Officers and Corporate Governance 55
Item 11. Executive Compensation 55
Item 14. Principal Accounting Fees and Services 56
PART IV
Item 15. Exhibits and Financial Statement Schedules 57
Signatures 63
Page 2
FORWARD-LOOKING STATEMENTS
Certain statements contained in this annual report and in documents incorporated by reference 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,” “objective” and similar expressions are intended
to identify forward-looking statements. These forward-looking statements include certain information relating to the Company’s business strategy and future prospects; including, but not limited to:
• 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 Annual Report reflect what the Company currently anticipates will happen. What actually happens could differ
materially from what it currently anticipates will happen and caution should be exercised against placing undue reliance upon such statements, which are based only on information currently available to the Company and speak only as of the date
hereof. The Company does not intend to make a public announcement when forward-looking statements in this Annual 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:
• levels of rate relief granted;
• the ability to obtain permits for expansion projects;
• changes in economic and business conditions, including interest rates;
• loss of customers;
• the impact of acquisitions;
• changes in accounting pronouncements;
• the ability to obtain financing.
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THE YORK WATER COMPANY
PART I
Item 1. Business.
The York Water Company (the “Company”) is the oldest investor-owned water utility in the United States and is duly organized under the laws of the
Commonwealth of Pennsylvania. The Company has operated continuously since 1816. 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 twelve wastewater collection and treatment systems. The Company operates within its franchised water and wastewater territory, which covers portions of 58 municipalities within four counties in south-central
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 for its primary system for
York and Adams Counties from both the South Branch and East Branch of the Codorus Creek, which together have an average daily flow of approximately 73.0 million gallons from a combined watershed area of approximately 117 square miles. The Company
has two reservoirs on this primary system, Lake Williams and Lake Redman, which together hold up to approximately 2.5 billion gallons of water. The Company supplements these 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 obtains its water supply for its system for Franklin County from the Roxbury Dam on the Conodoguinet Creek, which has an average
daily flow of approximately 26.0 million gallons from a watershed area of approximately 33 square miles. The Company has a reservoir on this system which holds up to approximately 330 million gallons of water. The Company also owns fifteen wells
which are capable of providing a safe yield of approximately 923,000 gallons per day to supply water to the customers of its groundwater satellite systems in York, Adams, and Lancaster Counties. As of December 31, 2025, the Company’s average daily
availability was 41.1 million gallons, and average daily consumption was approximately 23.7 million gallons. The Company’s service territory had an estimated population of 214,000 as of December 31, 2025. 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 precipitation. 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 billing and collection services. The Company continues to review and consider
opportunities to expand this initiative to further diversify the business.
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Competition
As a regulated utility, the Company operates within an exclusive franchised territory that is substantially free from direct competition with other
public utilities, municipalities, and other entities. Although the Company has been granted an exclusive franchise for each of its existing community water and wastewater systems, the ability of the Company to expand or acquire new service
territories may be affected by currently unknown competitors obtaining franchises to surrounding systems by application or acquisition. These competitors may include other investor-owned utilities, nearby municipally-owned utilities and sometimes
competition from strategic or financial purchasers seeking to enter or expand in the water and wastewater industry. The addition of new service territory and the acquisition of other utilities are generally subject to review and approval by the
PPUC.
Water and Wastewater Quality and Environmental Regulations
Provisions of water and wastewater service are subject to regulation under the federal Safe Drinking Water Act, the Clean Water Act and related state
laws, and under federal and state regulations issued under these laws. In addition, the Company is subject to federal and state laws and other regulations relating to solid waste disposal, dam safety and other aspects of its operations.
The federal Safe Drinking Water Act establishes criteria and procedures for the U.S. Environmental Protection Agency, or EPA, to develop national quality
standards. Regulations issued under this Act, and its amendments, set standards on the amount of certain contaminants allowable in drinking water. Current requirements are not expected to have a material impact on the Company’s operations or
financial condition as it already meets or exceeds standards. In the future, the Company may be required to change its method of treating drinking water and may incur additional capital investments if new regulations become effective.
Under the requirements of the Pennsylvania Safe Drinking Water Act, or SDWA, the Pennsylvania Department of Environmental Protection, or DEP, regulates
the quality of the finished water supplied to customers. The DEP requires the Company to submit monthly reports showing the results of daily bacteriological and other chemical and physical analyses. As part of this requirement, the Company
conducts over 70,000 laboratory tests annually. Management believes that the Company complies with the standards established by the agency under the SDWA. The DEP assists the Company by regulating discharges into the Company’s watershed area to
prevent and eliminate pollution.
The federal Groundwater Rule establishes protections against microbial pathogens in community water supplies. This rule requires additional testing of
water from well sources, and under certain circumstances requires demonstration and maintenance of effective disinfection. The Company holds public water supply permits issued by the DEP, which establishes the groundwater source operating
conditions for its wells, including demonstrated 4-log treatment of viruses. All of the groundwater satellite systems operated by the Company are in compliance with the federal Groundwater Rule.
The Clean Water Act regulates discharges from water and wastewater treatment facilities into lakes, rivers, streams, and groundwater. The Company
complies with this Act by obtaining and maintaining all required permits and approvals for discharges from its water and wastewater facilities and by satisfying all conditions and regulatory requirements associated with the permits.
The DEP monitors the quality of wastewater discharge effluent under the provisions of the National Pollutant Discharge Elimination System, or NPDES. The
Company submits monthly reports to the DEP showing the results of its daily effluent monitoring and removal of sludge and biosolids. The Company is not aware of any significant environmental remediation costs necessary from the handling and
disposal of waste material from its wastewater operations.
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The primary avenue for lead and copper to enter drinking water is through plumbing materials. The Company is required to comply with the Lead and Copper
Rule established by the EPA and administered by the DEP. The Company must monitor drinking water at customer taps for compliance with this rule. If lead concentrations exceed an action level, the Company must undertake additional actions to
control corrosion, inform the public about steps they should take to protect their health and may be required to replace lead service lines under its control. The Company is currently in compliance with standards under the Lead and Copper Rule.
The EPA published the Lead and Copper Rule Revisions, or LCRR, that included a requirement to submit a service line inventory and a lead service line
replacement plan to the respective states or agencies by October 16, 2024. Additionally, the EPA adopted a new regulation, the Lead and Copper Rule Improvements, or LCRI, to focus on the replacement of lead and certain galvanized steel service
lines and ensure public education is provided along with sampling at elementary schools and childcare facilities by 2037. The Company successfully submitted its service line inventory and is developing elementary school and childcare facility
mailings in preparation for LCRI sampling compliance.
The DEP and the Susquehanna River Basin Commission, or SRBC, regulate the amount of water withdrawn from streams in the watershed to assure that
sufficient quantities are available to meet the needs of the Company and other regulated users. Through its Division of Dam Safety, the DEP regulates the operation and maintenance of the Company’s impounding dams. The Company routinely inspects
its dams and prepares annual reports of their condition as required by DEP regulations. The DEP reviews these reports and inspects the Company’s dams.
Since 1980, the DEP has required any new dam to have a spillway that is capable of passing the design flood without overtopping the dam. The design
flood is either the Probable Maximum Flood, or PMF, or some fraction of it, depending on the size and location of the dam. PMF is very conservative and is calculated using the most severe combination of meteorological and hydrologic conditions
reasonably possible in the watershed area of a dam.
The Company engaged a professional engineer to analyze the spillway capacities at the Lake Williams and Lake Redman dams and validate the DEP’s
recommended flood design for the dams. Management presented the results of the study to the DEP in December 2004, and DEP then requested that the Company submit a proposed schedule for the actions to address the spillway capacities. Thereafter,
the Company retained an engineering firm to prepare preliminary designs for increasing the spillway capacities to pass the PMF through armoring the dams with roller compacted concrete. Management met with the DEP on a regular basis to review the
preliminary design and discuss scheduling, permitting, and construction requirements including their concern regarding the stability of the Lake Williams spillway in light of current design standards. The Company completed the final design and the
permitting process to armor the dam and replace the spillway of the Lake Williams dam and began construction in 2022. The Company completed the dam armoring and spillway replacement in 2023 at a total cost of approximately $40 million. Additional
capital expenditures were incurred in 2024 and 2025 and are expected to be completed in 2026 for sitework around the dam and reservoir. The Lake Redman dam will be reassessed following the completion of the work on the Lake Williams dam.
Capital expenditures and operating costs required as a result of water quality standards and environmental requirements have been traditionally
recognized by state public utility commissions as appropriate for inclusion in establishing rates. The capital expenditures currently required as a result of water quality standards and environmental requirements have been budgeted in the
Company’s capital program and represent less than 15% of its expected total capital expenditures over the next five years. The Company is currently in compliance with wastewater environmental standards and does not anticipate any major capital
expenditures for its current wastewater business.
Growth
(All dollar amounts are stated in thousands of dollars)
The Company continues to grow its number of customers and distribution facilities.
The growth in the number of customers is due primarily to the acquisition of water and wastewater systems and organic growth. During the year ended
December 31, 2025, the Company increased its number of customers from 79,771 to 81,292. See “Management’s Discussion and Analysis – Acquisitions and Growth” for a discussion of the Company’s recent acquisitions.
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The Company continues to grow its water distribution and wastewater collection systems to provide reliable service to its expanding franchised service
territory and the increasing population within that territory. During the year ended December 31, 2025, the Company installed additional water distribution mains resulting in 1,105 miles of water mains as of December 31, 2025.
The Company’s growth in revenues is primarily a result of customer growth and increases in water and wastewater rates. During the year ended December
31, 2025, the Company recognized revenue of $77,488, an increase of $2,529, or 3.4%, as compared to $74,959 during the year ended December 31, 2024. In 2025, operating revenue was derived from the following sources and in the following
percentages: residential, 64%; commercial and industrial, 29%; and other, 7%, which is primarily from the provision for fire service but includes other water and wastewater service-related income. See “Management’s Discussion and Analysis – Rate
Matters” for a discussion of the Company’s rate case management.
Information about Our Executive Officers
The Company presently has 129 employees including the officers detailed in the information set forth under the caption “Executive Officers of the
Company” of the 2026 Proxy Statement incorporated herein by reference.
Available Information
The Company makes available free of charge, on or through its website (www.yorkwater.com), its annual report on Form 10-K, its quarterly reports on Form
10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after the Company electronically files such material with, or furnishes
it to, the SEC. The SEC also maintains a website at www.sec.gov that contains reports, proxy statements, and other information about SEC registrants, including the Company.
Shareholders may request, without charge, copies of the Company’s financial reports. Such requests, as well as other investor relations inquiries, should
be addressed to:
Molly E. Houck The York Water Company (717) 718-2942
Investor Relations Coordinator York, PA 17401 mollyh@yorkwater.com
Item 1A. Risk Factors.
Not applicable.
Item 1B. Unresolved Staff Comments.
None.
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Item 1C. Cybersecurity.
Risk Management and Strategy
The Company recognizes the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard its information
systems and protect the confidentiality, integrity, and availability of its data.
Managing Material Risks & Integrated Overall Risk Management
The Company embraces risk management across the company, to include cybersecurity risk. This comprehensive approach ensures that cybersecurity
considerations are an integral part of its decision-making processes at every level. The Company’s risk management team works closely with its IT department to continuously evaluate and address cybersecurity risks in alignment with its
business objectives and operational needs.
Engage Third Parties on Risk Management
To address the evolving nature and complexity of cybersecurity threats, the Company engages with a range of external experts, including cybersecurity
assessors, consultants, and auditors in evaluating and testing its risk management systems. These partnerships enable the Company to leverage specialized knowledge and insights with respect to its cybersecurity strategies and processes. The
collaboration with these third parties includes regular audits, threat assessments, penetration testing, and consultation on security enhancements.
Oversee Third-party Risk
The Company recognizes that cybersecurity threats and risks are amplified with the addition of third-party digital service providers. In response,
the Company implements stringent processes to oversee and manage these risks. It conducts thorough security assessments of all third-party providers before engagement and maintains ongoing monitoring to ensure compliance with its
cybersecurity standards. This process is also intended to provide for the security and integrity of the Company’s data that may be stored on third-party systems. The monitoring includes quarterly assessments made by the contracted Chief
Information Officer, or CIO, and on an ongoing basis by its dedicated cybersecurity staff. This approach is designed to mitigate risks related to data breaches or other security incidents originating from third parties.
Incident Response Plan
The Company maintains and tests its Incident Response Plan, or IRP, to appropriately document plans for identifying, prioritizing, containing, and
communicating information related to an incident. The Company completes annual tabletop testing of its IRP, including a testing results review to identify opportunities for improvement.
Risk Evaluation
Water utilities face several cybersecurity risks due to their critical role in monitoring and controlling water treatment and distribution
processes and servicing customers. The key risks the Company has evaluated that could adversely impact system confidentiality, integrity, and/or availability include:
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Identified Material Risks
To date, the Company has not encountered cybersecurity challenges, risks, or breaches that have materially impaired its business strategy, operations, or its financial standing.
Board of Directors Oversight of Cybersecurity Material Risks – Governance
The Board of Directors, or the Board, is keenly aware of the critical nature of cybersecurity risks, particularly in its business as a public utility
providing a life sustaining product. The Board, in partnership with the Executive team, has created a robust cybersecurity program, with meaningful oversight measures and tools for tracking and managing cyber risks and threats. The Company
understands the importance of its product and services to the communities that it serves and is dedicated to maintaining high stakeholder confidence in its operations.
Board Oversight
The Audit Committee is the lead Board committee with oversight of the cybersecurity program and bears the primary responsibility for this aspect of the
business. The Audit Committee is comprised of Board members with diverse professional backgrounds, such as accounting/finance, utility security, risk management, and business performance integration. The breadth of experience in this Committee
enables it to be the most appropriate lead in oversight of cybersecurity risks and capability.
Management Role
The Chief Administrative Officer and General Counsel has primary oversight of the IT Department and the cybersecurity program, with a direct reporting
relationship to the President and Chief Executive Officer. The Chief Administrative Officer and General Counsel also reports to the Audit Committee at least two times per calendar year and presents a report to the Board at least once per
calendar year. These briefings include both educational and program status information, including:
• Status of ongoing cybersecurity initiatives and strategies;
• Maintenance and testing of the IRP;
• Compliance report with regulatory requirements and industry standards.
In addition to scheduled presentations described above, the IT Department contracted CIO, the Chief Administrative Officer and General Counsel, and the
President and Chief Executive Officer maintain constant dialogue regarding emerging or potential cybersecurity risks and threats. The Chief Administrative Officer and General Counsel is in regular contact with the Audit Committee Chair related
to these risks so that the oversight by the Board can be both proactive and responsive. The Audit Committee has the authority to actively participate in
strategic decisions related to cybersecurity and offers guidance and approval for major initiatives. As a result, cybersecurity considerations can be integrated into the foundation of broader corporate objectives. The Audit Committee and the
Board conduct an annual review of the Company’s cybersecurity risk position and the effectiveness of its risk management strategies and measures. From this review at the Board level, the Company is able to identify areas where there exist
improvement opportunities and can set goals for the following year.
Risk Management Personnel
Primary responsibility for assessing, monitoring, and managing cybersecurity risks rests with the CIO, who has oversight over the IT Department, including one dedicated cybersecurity staff person and select specialized contractors. This group of contractors includes a Chief
Information Security Officer, IT Director, Cybersecurity Analysts, Network Engineers, and Network Administrators. The CIO, Chief
Information Security Officer, and IT Director all have a minimum of ten years of experience in the cybersecurity and technology leadership field.
Monitor Cybersecurity Risks
The cybersecurity team actively monitors for cybersecurity risks by employing the use of endpoint detection and response solutions with immediate alert
notifications, vulnerability scanning solutions that proactively identify risks, and by monitoring the logs of network devices.
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Reporting to the Board
The Chief Administrative Officer and General Counsel has primary responsibility to report to the President and Chief Executive Officer and to the Board and presents with the CIO where appropriate for the content of the presentation and/or to facilitate a substantive discussion.
The CIO, through the Chief Administrative Officer and General Counsel, ensures that the highest levels of the Company remain informed about the cybersecurity posture, potential risks, events, and response if they occur. Material cybersecurity
matters, and significant strategic risk management processes and decisions are elevated to the Board by the Chief Administrative Officer and General Counsel, ensuring that the Board has effective and substantive oversight and may provide input
and guidance on critical cybersecurity measures and issues.
Item 2. Properties.
Source of Water Supply
The Company obtains the bulk of its water supply for its primary system for York and Adams Counties from both the South Branch and East Branch of the
Codorus Creek, which together have an average daily flow of approximately 73.0 million gallons from a combined watershed area of approximately 117 square miles. The Company owns two impounding dams on this primary system located in York and
Springfield Townships adjoining the Borough of Jacobus to the south. The lower dam, the Lake Williams Impounding Dam, creates a reservoir covering approximately 165 acres and the upper dam, the Lake Redman Impounding Dam, creates a reservoir
covering approximately 290 acres, which together hold up to approximately 2.5 billion gallons of water. The Company supplements these 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 per day, or MGD.
The Company obtains its water supply for its system for Franklin County from the Roxbury Dam on the Conodoguinet Creek, which has an average daily flow
of approximately 26.0 million gallons from a watershed area of approximately 33 square miles. The Company has a reservoir on this system which holds up to approximately 330 million gallons of water.
The Company also owns satellite groundwater systems in York, Adams, and Lancaster Counties. The systems consist of fifteen wells capable of providing a
combined safe yield of approximately 923,000 gallons per day.
As of December 31, 2025, the Company’s present average daily availability was 41.1 million gallons, and daily consumption was approximately 23.7 million
gallons.
Pumping Stations
The Company’s main pumping station is located in Spring Garden Township, York County, on the south branch of the Codorus Creek about four miles
downstream from the Company’s lower impounding dam. The pumping station houses pumping equipment with a combined permitted capacity of 42.0 MGD. A large diesel backup generator is installed to provide power to the pumps in the event of an
emergency. The untreated water is pumped approximately two miles to the filtration plant through pipes owned by the Company.
The Susquehanna River Pumping Station is located on the western shore of the Susquehanna River in York County, several miles south of Wrightsville. The
pumping station houses pumping equipment with a combined permitted capacity of 12.0 MGD. The pumping station pumps water from the Susquehanna River approximately 15 miles through a combination of 30 inch and 36 inch ductile iron main to the
Company’s upper impounding dam, located at Lake Redman.
The Lake Redman Pumping Station is located in York Township, York County, adjacent to Lake Redman. The pumping station is designed to provide a redundant
source with permitted capacity to pump 20.0 MGD of untreated water through a company-owned 36 inch force main approximately 3.5 miles to the filtration plant, meeting the Company’s daily consumption needs.
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Treatment Facilities
The Company’s primary water filtration plant is located in Spring Garden Township, York County, about one-half mile south of the City of York. Water at
this plant is filtered through twelve dual media filters having a rated capacity of 39.0 MGD, with a maximum supply of 42.0 MGD for short periods if necessary.
The Company’s sediment recycling facility is located adjacent to this water filtration plant. This state of the art facility employs cutting edge
technology to remove fine, suspended solids from untreated water. The Company estimates that through this energy-efficient, environmentally friendly process, approximately 600 tons of sediment will be removed annually, thereby improving the
quality of the Codorus Creek watershed.
The Company also operates a water filtration plant in Greene Township, Franklin County. Water at this plant is filtered through filters having a rated
capacity of 1.16 MGD.
Based on a total average daily consumption in 2025 of approximately 23.7 million gallons, the Company believes the water pumping and filtering facilities
are adequate to meet present and anticipated demands.
The Company has twelve wastewater treatment facilities located in four counties within south-central Pennsylvania. The wastewater treatment plants consist
of one pond and lagoon treatment facility with spray fields for ground application and in excess of 5 million gallon storage capacity, and the other plants range from small extended aeration package plants to three larger facilities that utilize
Biological Nutrient Removal/tertiary treatment technology. In total the plants have a combined permitted flow capacity of 1,352,500 gallons. With a projected maximum daily demand of 519,734 gallons, the plants’ flow paths offer both capacity and
operational redundancy for maintenance, high flow events, and potential growth.
Distribution and Collection
The water distribution systems of the Company have approximately 1,105 miles of water main lines which range in diameter from 2 inches to 36 inches. The
distribution systems include booster stations and standpipes and reservoirs capable of storing approximately 58.7 million gallons of potable water. All booster stations are equipped with at least two pumps for protection in case of mechanical
failure. Following a deliberate study of customer demand and pumping capacity, the Company installed standby generators at all critical booster stations to provide an alternate energy source or emergency power in the event of an electric utility
interruption.
The wastewater collection systems of the Company have approximately 117 miles of gravity collection mains and pressure force mains along with redundant
sewage pumping stations.
Other Properties
The Company’s distribution center and material and supplies warehouse are located in Springettsbury Township and are composed of three one-story concrete
block buildings aggregating 30,680 square feet.
The administrative and executive offices of the Company are located in one three-story and one two-story brick and masonry buildings, containing a total
of approximately 21,861 square feet, in the City of York, Pennsylvania.
All of the Company’s properties described above are held in fee by the Company. There are no material encumbrances on such properties.
In 1976, the Company entered into a Joint Use and Park Management Agreement with York County under which the Company licensed use of certain of its lands
and waters for public park purposes for a period of 50 years. Under the agreement, York County has agreed not to erect a dam upstream on the East Branch of the Codorus Creek or otherwise obstruct the flow of the creek.
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Item 3. Legal Proceedings.
There are no material legal proceedings involving the Company.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Market Information
The common stock of The York Water Company is traded on the NASDAQ Global Select Market under the symbol YORW.
Shareholders of record (excluding individual participants in securities positions listings) as of December 31, 2025 numbered approximately 1,693.
Securities Authorized for Issuance under Equity Compensation Plans
The information required by this item with respect to securities authorized for issuance under equity compensation plans is set forth in Part III, Item
12 of this Annual Report.
Purchases of Equity Securities by the Company
The Company did not repurchase any of its securities during the fourth quarter of 2025.
Item 6. Reserved.
(All dollar amounts are stated in thousands of dollars.)
Overview
The York Water Company (the “Company”) is the oldest investor-owned water utility in the United States, operated continuously since 1816. The Company
also owns and operates three wastewater collection systems and twelve wastewater collection and treatment systems. The Company is a purely regulated water and wastewater utility. Profitability is largely dependent on water revenues. Due to the
size of the Company and the limited geographic diversity of its service territory, weather conditions, particularly precipitation, economic, and market conditions can have an adverse effect on revenues. The Company experienced increased revenues
in 2025 compared to 2024 primarily due to an increase in the number of customers and higher revenues from the 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.
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. In 2025, operating revenue was derived from the following sources and in the following percentages: residential, 64%; commercial and industrial, 29%; and other, 7%, which is primarily from the provision for fire
service, but includes other water and wastewater service-related income. The diverse customer mix helps to reduce volatility in consumption.
The Company seeks to grow revenues by increasing the volume of water sold and wastewater service provided through increases in the number of customers,
making timely and prudent investments in infrastructure replacements, expansion and improvements, and timely filing for rate increases. The Company continuously looks for acquisition and expansion opportunities both within and outside its current
service territory as well as through contractual services and bulk water supply.
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The Company has agreements with several municipalities to provide billing and collection services. The Company continues to review and consider
opportunities to expand this initiative to further diversify the business.
In addition to increasing revenue, the Company consistently focuses on minimizing costs without sacrificing water quality or customer service. Paperless
billing, expanding online services, negotiation of favorable electric, banking, and other costs, and reduced pension contributions are examples of the Company’s recent efforts to minimize costs.
Performance Measures
Company management uses financial measures including operating revenues, net income, earnings per share and return on equity to evaluate its financial
performance. Additional statistical measures including number of customers, customer complaint rate, annual customer rates and the efficiency ratio are used to evaluate performance quality. These measures are calculated on a regular basis and
compared with historical information, budget and the other publicly-traded water and wastewater companies.
The Company’s performance in 2025 was strong under the above measures. Operating revenues increased in 2025 compared to 2024 primarily due to an
increase in the number of customers and higher revenues from the DSIC. The increase in operating expenses offset the increase in operating revenues. The Company incurred higher interest expense and lower allowance for funds used during
construction. The Company did benefit from a lower income taxes and a gain on life insurance. The overall effect was a decrease in net income in 2025 over 2024 of 1.3% and a return on year end common equity of 8.3%. The return on year end common
equity was lower than the 2024 result and the five year historical average return on year end common equity of 10.3%. The Company’s recently implemented rate increase
should increase its opportunity to earn a higher return on year end common equity in the future.
The efficiency ratio, which is calculated as net income divided by revenues, is used by management to evaluate its ability to control expenses. Over the
five previous years, the Company’s ratio averaged 31.0%. In 2025, the ratio was lower than the average at 25.9% due primarily to the increase in operating expenses, higher interest expense, and lower allowance for funds used during construction.
Management is confident that its ratio will compare favorably to that of its peers. Management continues to look for ways to decrease expenses and increase efficiency as well as to file for rate increases promptly when needed.
2025 Compared with 2024
Net income for 2025 was $20,058, a decrease of $267, or 1.3%, from net income of $20,325 for 2024. The primary contributing factors to the decrease were
higher operating expenses, higher interest on debt, and a lower allowance for funds used during construction, which were partially offset by higher operating revenues, lower income taxes, and a gain on life insurance.
Operating revenues for 2025 increased $2,529, or 3.4%, from $74,959 for 2024 to $77,488 for 2025. The increase was primarily due to growth in the
customer base and revenues from the DSIC of $1,986. The average number of water customers served in 2025 increased as compared to 2024 by 1,165 customers, from 72,415 to 73,580 customers. The average number of wastewater customers served in 2025
increased as compared to 2024 by 490 customers, from 6,521 to 7,011 customers, primarily due to acquisitions. Total per capita consumption for 2025 was approximately 1.6% lower than 2024. The Company expects revenues for 2026 to increase due to
an increase in rates effective March 1, 2026, and the continued increase in the number of water and wastewater customers from acquisitions and growth within the Company’s service territory. Other regulatory actions, weather patterns, and economic
conditions could impact results.
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Operating expenses for 2025 increased $2,865, or 6.1%, from $46,918 for 2024 to $49,783 for 2025. The increase was primarily due to higher expenses of
approximately $1,279 for depreciation and amortization, $931 for wages and benefits, $424 for distribution system maintenance, $161 for technology upgrades, $93 for reduced capitalized overhead, $89 for water treatment, and $59 for purchased
power. Other operating expenses increased by a net of $358. The increase was partially offset by reduced expenses of $339 for the provision for uncollectible accounts, $118 for outside services, and $72 for wastewater treatment. In 2026, the
Company expects depreciation and amortization expense to continue to rise due to additional investment in utility plant, and other expenses to increase as costs to treat water and wastewater, and to maintain and extend the distribution and
collection systems, continue to rise. Weather patterns could further increase operating expenses.
Interest on debt for 2025 increased $1,358, or 15.3%, from $8,904 for 2024 to $10,262 for 2025. The increase was primarily due to an increase in
long-term debt outstanding and higher interest rates. The average debt outstanding under the line of credit and short-term borrowings was $29,857 for 2025 and $10,087 for 2024. The weighted average interest rate on the line of credit and
short-term borrowings was 5.41% during 2025 and 5.23% during 2024. Interest expense for 2026 is expected to increase due to an increase in long-term debt outstanding. A potential equity offering to pay down the line of credit and short-term
borrowings may offset the expected increase.
Allowance for funds used during construction decreased $1,232, from $2,052 in 2024 to $820 in 2025 due to a lower volume of eligible construction.
Allowance for funds used during construction in 2026 is expected to remain consistent based on the projected amount of eligible construction.
A non-recurring gain on life insurance of $831 was recorded in 2025 as a result of death benefits from life insurance policies. No similar gains are
anticipated in 2026.
Other income (expenses), net for 2025 reflects increased expenses of $344 as compared to 2024. The increase was primarily due to higher retirement
expenses of approximately $310 and higher charitable contributions of $114. Other expenses decreased by a net of $80. In 2026, other income (expenses) will be largely determined by the change in market returns and discount rates for retirement
programs and related assets.
Income tax expense for 2025 decreased $2,166 as compared to 2024 due to higher deductions for the Internal Revenue Service, or IRS, tangible property
regulations, or TPR. The Company’s effective tax rate was (4.2)% for 2025 and 6.2% for 2024. The Company’s effective tax rate for 2026 will be largely determined by the level of eligible asset improvements expensed for tax purposes under IRS
TPR. The Company expects the level to be lower in 2026, increasing the effective tax rate as compared to 2025.
Rate Matters
See Note 10 to the Company’s financial statements included herein for a discussion of its rate matters.
Effective January 1, 2026, the Company’s tariff included a DSIC on revenues of 4.89%. The DSIC reset to zero when new rates took effect on March 1,
2026.
Acquisitions and Growth
See Note 2 to the Company’s financial statements included herein for a discussion of completed acquisitions included in financial results.
On December 23, 2025, the Company signed an agreement to purchase the water
assets of Lenwood Management, LLC in Southampton Township, Franklin County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the fourth quarter of
2026 at which time the Company will add approximately 90 water customers.
On December 11, 2025, the Company signed an agreement to purchase the water
assets of Mt. Rock Manor Management, LLC in Southampton Township, Franklin County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the fourth
quarter of 2026 at which time the Company will add approximately 140 water customers.
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On June 13, 2025, the Company signed an agreement to purchase the wastewater collection and treatment assets of Pine Run Retirement Community in Hamilton
Township, Adams County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second quarter of 2026 at which time the Company will add approximately
100 wastewater customers.
On January 24, 2025, the Company signed an agreement to purchase the water assets of Eagle View Manufactured Housing Community in Berwick Township, Adams
County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second quarter of 2026 at which time the Company will add approximately 140 water
customers.
On February 7, 2024, the Company signed an agreement to purchase the wastewater collection assets of Margaretta Mobile Home Park in Lower Windsor
Township, York County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the fourth quarter of 2026 at which time the Company will add approximately
65 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 potential declines in per capita water consumption and to grow its business.
Capital Expenditures
During 2025, the Company invested $48,725 in construction expenditures for main extensions and an upgrade to the enterprise software system, as well as
various replacements and improvements to infrastructure and routine items. The Company replaced approximately 54,100 feet of water main and 1,800 feet of wastewater main in 2025. 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 from developers, municipalities, customers, or builders. See Notes 1, 4 and 5 to the Company’s financial
statements included herein.
The Company anticipates construction and acquisition expenditures for 2026 and 2027 of approximately $48,000 in each year, exclusive of any acquisitions
not yet approved. In addition to routine transmission and distribution projects, a portion of the anticipated 2026 and 2027 expenditures will be for additional main extensions, an upgrade to the enterprise software system, water treatment plant
construction, water tank replacement, wastewater treatment plant construction, and various replacements of infrastructure. The Company intends to use primarily internally-generated funds for its anticipated 2026 and 2027 construction and fund the
remainder through line of credit borrowings, potential debt and equity offerings, proceeds from its stock purchase plans and customer advances and contributions (see Note 1 to the Company’s financial statements included herein). Customer advances
and contributions are expected to account for between 5% and 10% of funding requirements in 2026 and 2027. The Company believes it will have adequate credit facilities and access to the capital markets, if necessary, during 2026 and 2027, to fund
anticipated construction and acquisition expenditures.
Liquidity and Capital Resources
Cash
The Company manages its cash through a cash management account that is directly connected to its line 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 December 31, 2025, the Company borrowed $32,290 under its line of credit and incurred a cash
overdraft on its cash management account of $1,836, which was recorded in accounts payable. The cash management facility connected to the line of credit is expected to provide the necessary liquidity and funding for the Company’s operations,
capital expenditures, and acquisitions for the foreseeable future.
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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 2025, higher revenue levels as compared to 2024 resulted in an increase in accounts receivable – customers. A reserve is maintained at a level considered adequate to provide for expected credit losses.
Expected credit losses are based on historical write-offs combined with an evaluation of current conditions and reasonable and supportable forecasts including inactive accounts with outstanding balances, the aging of balances in payment agreements,
adverse situations that may affect a customer’s ability to pay, economic conditions, and other relevant factors applied to the current aging of receivables. Customer accounts are written off when collection efforts have been exhausted. If the
status of the evaluated factors deteriorate, 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, customers’ water usage, weather conditions, customer growth and controlled expenses. In 2025, the Company generated $29,860 internally as compared to $30,559 in 2024. The decrease from 2024 was primarily due to
higher interest paid partially offset by increased cash receipts from customers and the timing of payments to vendors.
Common Stock
Common stockholders’ equity as a percent of the total capitalization was 51.7% as of December 31, 2025, compared with 52.6% as of December 31, 2024. The
ratio decreased in 2025 due to higher debt primarily from capital expenditures. The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward until it approaches fifty percent before
considering additional equity. It is the Company’s general intent to target equity between fifty and fifty-five percent of total capitalization.
The Company has an effective “shelf” Registration Statement on Form S-3 on file with the Securities and Exchange Commission, pursuant to which the
Company may offer an aggregate remaining amount of up to $60,000 of its common stock or debt securities subject to market conditions at the time of any such offering.
Credit Line
Historically, the Company has borrowed under its lines of credit before refinancing with long-term debt or equity capital. As of December 31, 2025, the
Company maintained a $50,000, unsecured, committed line of credit at an interest rate of the Secured Overnight Financing Rate, or SOFR, plus 1.17% with an unused commitment fee and an interest rate floor. The Company had $32,290 in outstanding
borrowings under its line of credit as of December 31, 2025. The interest rate on line of credit borrowings as of December 31, 2025 was 5.04%. In the third quarter of 2025, the Company renewed its committed line of credit and extended the
maturity date to September 2027. No other terms or conditions of the line of credit agreement were modified. The Company expects to renew this line of credit as it matures under similar terms and conditions.
The Company has taken steps to manage the risk of reduced credit availability. It has established a committed line of credit with a 2-year revolving
maturity that cannot be called on demand. 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 line of credit to meet financing
needs throughout 2026.
Term Loan
In December 2025, the Company entered into a $10,000 unsecured, committed term loan agreement. Interest is payable monthly at an interest rate of SOFR plus
1.35% as established on the first day of each calendar month. The principal balance can be repaid in whole or part at any time without premium. The term loan matures in December 2026. The interest rate on the term loan was 5.18% as of December
31, 2025. The Company expects to secure permanent financing in 2026 to repay this term loan.
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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 financial statements included herein for additional information regarding these restrictions.
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 48.3% as of December 31, 2025, compared with 47.4% as of December 31, 2024. The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward. A debt to total capitalization ratio between
forty-five and fifty percent has historically been acceptable to the PPUC in rate filings. See Note 6 to the Company’s financial statements included herein for the details of its long-term debt outstanding as of December 31, 2025.
Income Taxes, Deferred Income Taxes and Uncertain Tax Positions
Under the IRS TPR, 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 expects to continue to expense these asset improvements in the future.
The Company’s effective tax rate will largely be determined by income before income taxes and the level of eligible asset improvements expensed for tax
purposes that would have been capitalized for tax purposes prior to the implementation of the TPR.
On July 8, 2022, the Pennsylvania budget for the fiscal year ending June 30, 2023 was signed into law. A provision within the tax code bill included
with the budget provides for an annual phase-down of the Pennsylvania corporate net income tax rate of one percentage point in the first year beginning January 1, 2023 from 9.99% to 8.99%, and a one-half percentage point each year thereafter until
it reaches 4.99% beginning January 1, 2031. The Company has remeasured the state portion of the Company’s deferred income taxes. The effect, net of the federal benefit recognized in income for the years ended December 31, 2025 and 2024, was
immaterial. Deferred income taxes for differences that are recognized for ratemaking purposes on a cash or flow-through basis were remeasured with offsetting changes to regulatory assets and liabilities on the balance sheet as of December 31, 2025
and 2024. The Company expects any savings in its Pennsylvania current income taxes to be returned to its customers through the rate making process or as a future negative surcharge on their bills.
The Company has a substantial deferred income tax asset primarily due to the excess accumulated deferred income taxes on accelerated depreciation from
the Tax Cuts and Jobs Act of 2017 and the differences between the book and tax balances of the customers’ advances for construction and contributions in aid of construction, 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 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.
The Company has determined there are no uncertain tax positions that require recognition as of December 31, 2025. See Note 14 to the Company’s financial
statements included herein for additional details regarding income taxes.
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Credit Rating
On July 30, 2025, 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. In 2026, 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 the Company’s 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 was granted approval by the 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 date of 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 $2,087 and $1,961 through December 31, 2025 and 2024, respectively, and is included as a regulatory asset. Based on
its experience, the Company estimates that lead customer-owned service lines replacements will cost $2,100. This estimate is subject to adjustment as more facts become available. This tariff modification will expire on March 8, 2026 unless
extended by the PPUC.
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Drought
As of February 18, 2026, Pennsylvania state officials declared a drought watch for 34 counties in Pennsylvania, including York County within the
Company’s service territory, and a drought warning for 17 counties in Pennsylvania, including Adams, Franklin, and Lancaster Counties within the Company’s service territory. The watch calls for a voluntary reduction in nonessential water use of 5
to 10 percent and the warning calls for a voluntary reduction in nonessential water use of 10 to 15 percent. These measures could potentially impact future revenues, operating expenses, and net income depending on the length and severity of the
dry conditions.
Dividends
During 2025, the Company’s dividend payout ratios relative to net income and net cash provided by operating activities were 63.7% and 42.3%,
respectively. During 2024, the Company’s dividend payout ratios relative to net income and net cash provided by operating activities were 60.2% and 39.6%, respectively. During the fourth quarter of 2025, the Board increased the dividend by 4.0%
from $0.2192 per share to $0.2280 per share per quarter.
The Company’s Board declared a dividend in the amount of $0.2280 per share at its January 2026 meeting. The dividend is payable on April 15, 2026 to
shareholders of record as of February 27, 2026. While the Company expects to maintain this dividend amount in 2026, future dividends will be dependent upon the Company’s earnings, financial condition, capital demands and other factors and will be
determined by the Company’s Board. See Note 6 to the Company’s financial statements included herein for restrictions on dividend payments.
Inflation
The Company is affected by inflation, most notably by the continually increasing costs incurred to maintain and expand its service capacity. The
cumulative effect of inflation results in significantly higher facility replacement costs which must be recovered from future cash flows. The ability of the Company to recover this increased investment in facilities is dependent upon future rate
increases, which are subject to approval by the PPUC. The Company can provide no assurances that its rate increases will be approved by the PPUC; and, if approved, the Company cannot guarantee that these rate increases will be granted in a
timely or sufficient manner to cover the investments and expenses for which the rate increase was sought.
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
accounting for its pension plans.
Pension Accounting
Accounting for defined benefit pension plans requires estimates of future compensation increases, mortality, the discount rate, and expected return on
plan assets as well as other variables. These variables are reviewed annually with the Company’s pension actuary. The Company used compensation increases of 2.5% to 3.0% in 2024 and 2025.
The Company adopted the Pri-2012 mortality table, using the white collar table for the administrative and general plan and the blue collar table for the
union plan. In 2021, the Company adopted the MP-2021 mortality improvement scale, which slightly increased the life expectancy of pension plan participants, resulting in a slight increase to the pension benefit obligation, and ultimately, a
decrease in the Company’s funded status of the plans.
The Company selected its December 31, 2025 and 2024 discount rates based on the FTSE Pension Liability Index. This index uses spot rates for durations out
to 30 years and matches them to expected disbursements from the plan over the long term. The Company believes this index most appropriately matches its pension obligations. The present values of the Company’s future pension obligations were
determined using a discount rate of 5.30% at December 31, 2025 and 5.45% at December 31, 2024.
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Adopting a new mortality table that represents a change in life expectancy and choosing a different discount rate normally changes the amount of pension
expense and the corresponding liability. In the case of the Company, these items change its liability, but do not have an impact on its pension expense. The PPUC, in a previous rate settlement, agreed to grant recovery of the Company’s
contribution to the pension plans in customer rates. As a result, under the accounting standards regarding rate-regulated activities, expense in excess of the Company’s pension plan contribution can be deferred as a regulatory asset and expensed
as contributions are made to the plans and are recovered in customer rates. Therefore, these changes affect regulatory assets rather than pension expense.
The Company’s estimate of the expected return on plan assets is primarily based on the historic returns and projected future returns of the asset classes
represented in its plans. The target allocation of pension assets is 70% to 90% fixed income securities, 10% to 30% equity securities, and 0% to 10% cash reserves. The Company used 5.00% as its expected rate of return in 2024 and 2025. A
decrease in the expected pension return would normally cause an increase in pension expense; however due to the aforementioned rate settlement, the Company’s expense would continue to be equal to its contributions to the plans. The change would
instead be recorded in regulatory assets.
Lower discount rates and underperformance of assets could cause future required contributions and expense to increase substantially. If this were to
happen, the Company would have to consider changes to its pension plan benefits and possibly request additional recovery of expenses through increased rates charged to customers. See Note 11 to the Company’s financial statements included herein
for additional details regarding the pension plans.
Off-Balance Sheet Transactions
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 7 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 material lease obligations, no guarantees and does not have material transactions involving related parties.
Impact of Recent Accounting Pronouncements
There are currently no recent accounting pronouncements that are expected to have a material impact to the Company’s financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8. Financial Statements.
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 23) 22
Balance Sheets 23
Statements of Income 25
Statements of Common Stockholders’ Equity 26
Statements of Cash Flows 27
Notes to Financial Statements 28
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of The York Water Company
Opinion on the Financial Statements
We have audited the accompanying balance sheets of The York Water Company (the “Company”) as of December 31, 2025 and 2024, the related statements of
income, common stockholders’ equity, and cash flows, for the years then ended, and the related notes and financial statement schedule listed in Item 15(a)2 (collectively referred to as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that
there are no critical audit matters.
/s/ Baker Tilly US, LLP