ESSENTIAL UTILITIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) (In thousands of dollars, except per share amounts)
Note 5 – Accounts Receivable
December 31,
2025
2024
Billed utility revenue
$
257,735 $
211,168 14,295 225,463 58,941 166,522
Other
21,150 278,885 61,694
Less allowance for doubtful accounts
Net accounts receivable
$
217,191 $
As of December 31, 2025, the Company’s utility customers are located principally in the following states: 66% in Pennsylvania, 9% in Ohio, 6% in North Carolina, 5% in Texas, and 5% in Illinois. No single customer accounted for more than one percent of the Company's utility operating revenues during the years ended December 31, 2025, 2024, and 2023. The following table summarizes the changes in the Company’s allowance for doubtful accounts:
2025
2024
2023
Balance at January 1,
$
58,941 $
60,573 $
63,981 23,209
Amounts charged to expense
22,227
21,865
Accounts written off
(25,502)
(24,190)
(27,759)
Recoveries of accounts written off and other
6,028
693
1,142
Balance at December 31,
$
61,694 $
58,941 $
60,573
Note 6 – Regulatory Assets and Liabilities
Regulatory assets represent costs that are probable to be fully recovered from customers in future rates while regulatory liabilities represent amounts that are expected to be refunded to customers in future rates or amounts recovered from customers in advance of incurring the costs. Except for income taxes, utility plant retirement costs and water tank painting costs, regulatory assets and regulatory liabilities are excluded from the Company’s rate base and do not earn a return. The components of regulatory assets and regulatory liabilities are as follows:
December 31, 2025
December 31, 2024
Regulatory Regulatory
Regulatory Regulatory
Assets
Liabilities
Assets
Liabilities
Income taxes
$ 1,897,167 $ 450,713
$ 1,712,714 $ 528,656
Purchased gas costs
18,253 39,928 66,302
-
21,366 29,146 80,875
413
Utility plant retirement costs Post-retirement benefits
81,918 158,627
75,270 160,851
Accrued vacation Water tank painting
451
- - - -
418
- - - -
12,357 23,234 10,595 41,161
11,242 30,603 11,587 42,689
Fair value adjustment of long-term debt assumed in acquisition
Debt refinancing
Rate case filing expenses and other
23,229
1,325
$ 2,109,448 $ 714,487
$ 1,940,640 $ 766,515
Items giving rise to deferred state income taxes, as well as a portion of deferred Federal income taxes related to specific differences between tax and book depreciation expense, are recognized in the rate setting process on a cash basis or as a reduction in current income tax expense and will be recovered as they reverse. Amounts include differences that arise between specific utility asset improvement costs capitalized for book and deducted as an expense for tax purposes. Additionally, the recording of AFUDC for equity funds results in the recognition of a regulatory asset for income taxes, which represents amounts due related to the revenue requirement. The Company records regulatory assets when a valuation allowance is recorded on deferred tax assets, associated with state NOLs
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