ESSENTIAL UTILITIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) (In thousands of dollars, except per share amounts)
that we will exercise that option. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants.
Lease liabilities and corresponding right-of-use assets are recorded based on the present value of the lease payments over the expected lease term, including leases with variable payments that are based on a market rate or an index and net of any impairment. All other variable payments are expensed as incurred. Since the Company’s lease agreements do not provide an implicit interest rate, we utilize our incremental borrowing rate to determine the discount rate used to present value the lease payments.
Years Ended December 31,
2025
2024
2023
Components of lease expense were as follows: Operating lease cost
$
9,201 $
9,821 $
9,307
Years Ended December 31, 2025 2024
Supplemental cash flow information related to leases was as follows: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $
9,254 $
8,148
December 31,
2025
2024
Supplemental balance sheet information related to leases was as follows: Operating leases: Operating lease right-of-use assets $
25,923 $
31,263
Other accrued liabilities Operating lease liabilities
$
6,663
7,591
21,608
27,447 35,038
Total operating lease liabilities
$
28,271 $
December 31,
2025
2024
Weighted average remaining lease term: Operating leases
10.7 years
10.2 years
Weighted average discount rate: Operating leases
5.07%
5.15%
59
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