DELAWARE COUNTY REGIONAL

WATER QUALITY CONTROL AUTHORITY

AUDITED FINANCIAL STATEMENTS

DECEMBER 31, 2025

LEITZELL & ECONOMIDIS, PC

CYNTHIA Ferzer Lerrzert, CPA CERTIFIED Pupsrrc ACCOUNTANTS Sretia C. Economupis, CPA

DELAWARE COUNTY REGIONAL WATER

QUALITY CONTROL AUTHORITY

TABLE OF CONTENTS

Page

INDEPENDENT AUDITOR'S REPORT............ 1-3

MANAGEMENT'S DISCUSSION AND ANALYSIS 4-13

STATEMENTS OF NET POSITION. ......cccccccccescesseseseceeveesesteeseeteetsesseenetteeeen 14

STATEMENTS OF REVENUES, EXPENSES AND CHANGES

IN NET POSITION occccccccsccssssesceseesevseveceeeeceeestessetsiscesteeteeceecassestetieseesesenees 15

STATEMENTS OF CASH FLOWS 16

NOTES TO FINANCIAL STATEMENTS. .......0.cccccessesesecsecseteseeecsneteceeceeteteeeeeen 17-34

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULES OF CHANGES OF NET PENSION LIABILITY AND

RELATED RATIOS INVESTMENT RETURNS AND CONTRIBUTIONS 35-36

SCHEDULE OF CHANGES OF NET PENSION LIABILITY ........0.000cccccesseteeeeeees 37

SUPPLEMENTAL INFORMATION

SCHEDULES OF REVENUES ACTUAL VS BUDGET

SCHEDULES OF TOTAL EXPENSES ACTUAL VS BUDGET

COMPARATIVE SCHEDULES OF OPERATING EXPENSEG...........000 crete 40

SCHEDULE OF DEBT SERVICE SEWER REVENUE BONDS, 2015 SERIES............At

SCHEDULE OF DEBT SERVICE SEWER REVENUE BONDS, 2016 SERIES

go S. Newtown Street Road, Suite 10, Newtown Square, PA 19073 (610) 566-5450 Fax: (610) 566-5487 Members of American Institute of Certified Public Accountants, Pennsylvania Institute of Certified Public Accountants &

Government Finance Officers Association

ECONOMIDIS PC

CYNTHIA Ferzer Lerrzert, CPA Crermerp Pusric ACCOUNTANTS Sreuta C. Economipis, CPA

Page

SCHEDULE OF DEBT SERVICE SEWER REVENUE BONDS, 2017 SERIES

SCHEDUE OF DEBT SERVICE PENNVEST INFRASTRUCTURE LOAN

SCHEDULE OF DEBT SERVICE SEWER REVENUE BONDS, 2023 SERIES............A5

SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS TRUST FUNDS

ESTABLISHED UNDER AN INDENTURE DATED JULY 15, 2001 AND TOTAL

CASH AND INVESTMENTG.................. ccc ccc cee cee cee tebe eset eee eee sees eee eee eee cenee ee een ene enes 46

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDG............000000ceee47-48eee

90 S. Newtown Street Road, Suite 10, Newtown Square, PA 19073 (610) 566-5450 Fax: (610) 566-5487 Members of American Institute of Certified Public Accountants, Pennsylvania Institute of Certified Public Accountants &

PC

CERTIFIED ACCOUNTANTSCYNTHIA Farzer Lerrzert, CPA

STELLA C. CPA

INDEPENDENT AUDITOR'S REPORT

Board of Directors Delaware County Regional Water Quality Control Authority Chester, Pennsylvania

Report on the Audit of the Financial Statements

Opinion We have audited the accompanying financial statements of the Delaware County Regional Water Quality Control Authority ("DELCORA'"), as of and for the years ended December 31, 2025 and 2024, and the related notes to the financial statements, which collectively comprise DELCORA's financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Delaware County Regional Water Quality Control Authority as of December 3%, 2025 and

2024 and the changes in financial position, and cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion We conducted our audits in accordance with auditing standards generally accepted in the United States of

America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the DELCORA and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities ofManagement for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the DELCORA's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditor's Responsibilities for the Audit of Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and

Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud go S. Newtown Street Road, Suite 10, Newtown Square, PA 19073 (610) 566-5450 Fax: (610) 566-5487

Members of American institute of Certified Public Accountants, Pennsylvania Institute of Certified Public Accountants &

IY LEITZELL & ECONOMIDIS. Pc CYNTHIA Ferzer Lerrzert, CPA CERTIFIED PuBLic ACCOUNTANTS SIRLLA C. Economipis, CPA may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards and Auditing Standards, we:

* exercise professional judgment and maintain professional skepticism throughout the audit.

* identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

* obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the DELCORA's internal control. Accordingly, no such opinion is expressed.

* evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

* conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the DELCORA's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and net pension liability historical information on pages 4 to +3 and 35 to 37 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information

Our audit was conducted for the purpose of forming an opinion on the DELCORA's basic financial statements. The supplemental schedules on pages 38-46 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been sub ected to the auditing procedures applied in the audits of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures go S. Newtown Street Road, Suite 10, Newtown Square, PA 19073 (610) 566-5450 Fax: (610) 566-5487 Members of American Institute of Certified Public Accountants, Pennsylvania Institute of Certified Public Accountants &

ICY LErrzeELL & ECONOMIDIS PC CYNTHIA Ferzer CPA CERTIFIED Pusric ACCOUNTANTS

STELLA C. CPA

in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedules of operating revenues budget comparison, operating expenses budget comparison, debt service and cash receipts and disbursement trust funds established under an indenture dated July 15, 2001 and total cash and investments is fairly stated in all material respects in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June ra<6, 2026, on our consideration of DELCORA's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.

The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of testing, and not to provide an opinion on the effectiveness of DELCORA's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering DELCORA's internal control over financial reporting and compliance.

OtherMatters

As reported and detailed in Note 11 of the financial statements, DELCORA has entered into an asset purchase agreement with Aqua Pennsylvania Wastewater, Inc., through which Aqua Pennsylvania Wastewater, Inc. will acquire all DELCORA assets and liabilities as specified in the agreements. Various litigation regarding the agreement is still pending at this date.

& Economidis, PCleit Leitzell & Economidis, PC Newtown Square, Pennsylvania

June 16, 2025 go S. Newtown Street Road, Suite 10, Newtown Square, PA 19073 (610) 566-5450 Fax: (610) 566-5487 Members of American Institute of Certified Public Accountants, Pennsylvania Institute of Certified Public Accountants &

DELAWARE COUNTY REGIONAL WATER

QUALITY CONTROL AUTHORITY

Management's Discussion and Analysis (Unaudited) December 3°.2025

DELCORA Mission Statement

"Provide Environmentally Responsible and Cost Effective Waste Water Management Services to the Citizens, Businesses and Industries of Southeastern Pennsylvania"

Executive Summary

DELCORA's performance for the year ended December 31, 2025, includes the following key highlights:

On September

7, 20° 9, DELCORA entered into an Asset Purchase Agreement (APA) with Aqua.

Pursuant to the APA, DELCORA agreed to sell all of its assets to Aqua. Following the execution of the APA, Aqua filed an application with the Pennsylvania Public Utility Commission (PUC) seeking approval of the purchase of DELCORA's assets and for a certificate to serve DELCORA's customers.

In January 2021, the Administrative Law Judges for the Pennsylvania PUC recommended that

AQUA's application be denied. AQUA provided exceptions to the recommended decision to the

Pennsylvania Public Utility Commission (PA PUC). On March 25, 202", the PA PUC reopened the record and remanded the application back to the Administrative Law Judges for such further proceedings that may be appropriate. Delaware County, Pennsylvania appealed that decision to the Pennsylvania Commonwealth Court.

In May 2020, Delaware County, Pennsylvania filed a lawsuit alleging that DELCORA does not have the legal authority to establish and fund a customer trust with the proceeds of the sale of assets by

DELCORA to Aqua. In December 2020, the judge in the Delaware County court lawsuit issued an order that ( The County cannot interfere with the Asset Purchase Agreement between DELCORA and AQUA, (2) the County cannot terminate DELCORA prior to the closing of the transaction, and

(3) that the establishment of the Customer Trust was valid. In 202°, the County appealed the decision to the Pennsylvania Commonwealth Court. In March 2022, the Commonwealth Court held that although the County can ultimately terminate DELCORA; in doing so it must adhere to the terms of the Asset Purchase Agreement between DELCORA and AQUA.

In July of 2022, the Secretary of the Pennsylvania PUC issued an Order lifting the Stay of

Proceedings and directing the Office of Administrative Law Judge to promptly schedule hearings, briefing, and address other pending matters in the remanded proceeding.

On January "8, 2023, DELCORA filed a Complaint for Declaratory Judgment with the Delaware

County Court of Common Pleas, naming both Delaware County and Aqua as Defendants. The

Declaratory Judgment Action raised two claims: (" Whether the County Ordinance is a final action prohibiting DELCORA from carrying out the material transactions of the APA; and (2) In the event that DELCORA retains the abi ity to close on the transaction, whether DELCORA is permitted under the MAA to solely exist as a trust and maintain the protections of raa municipal entity while serving as a trust.

Managements Discussion and Analysis (Unaudited) December 31, 2025

On November "0, 2022, the Receiver for the City of Chester, Pennsylvania ("City") filed a petition under Chapter 9 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of PA ("Bankruptcy Court')

On February 3, 2023, the Receiver for the City filed with the Bankruptcy Court for the Eastern District of Pennsylvania a Motion of Debtor Pursuant to Section 362 of the Bankruptcy Code for

Entry of an Order Enforcing the Automatic Stay of Proceeding Before the Pennsylvania Public

Utilities Commission (PUC). DELCORA's "973 Sales Agreement contains a reversionary clause that DELCORA would return certain assets to The City should DELCORA no longer service the system. The identification and valuation of those assets is ongoing. Prior to the filing of their

Bankruptcy, the Receiver for the City of Chester filed Cca Complaint in Delaware County Common

Pleas seeking a Declaratory Judgment that the Revisionary Clause is in full force and effect and seeking damages related to DELCORA's inclusion of those assets in the APA with Aqua. This

Complaint was withdrawn without prejudice on August 31, 2023. On May 23, 2023, United States

Bankruptcy Judge Chan entered an Order granting the Debtor's Motion. Aqua has appealed the

Order and on April 16, 2026, the U.S. District Court for the Eastern District of PA approved the

Bankruptcy Court Order and denied Aqua's request to overturn the same.

On February 6, 2023, Administrative Law Judge Brady issued an Interim Order Granting a Joint

Motion for Stay in response to a motion filed by Delaware County, I&E, the OCA, and the OSBA requesting a stay of the PUC matter while the Chester Bankruptcy and DELCORA Declaratory

Judgment actions are resolved. At this time, the PUC matter is stayed pending a final unappealable decision of the Chester Bankruptcy Motion to Enforce Stay and also DELCORA's Complaint for

Declaratory Judgment. The Parties provide Judge Brady an update every 90 days on the status of the Bankruptcy and the Declaratory Judgment.

In addition, Univest Bank and Trust Co. (Univest) has filed a Petition in the Delaware County

Orphan's Court seeking to have a successor Trustee appointed for the DELCORA Rate Stabilization Trust. The parties have reached an amicable resolution which will allow the Court to have a successor appointed.

DELCORA pumps wastewater from eastern Delaware County to Philadelphia Water Department

(PWD) for treatment. In 2023, PWD dramatically changed its methodology for allocating its LTCP costs. In August 2023, PWD forwarded an amendment to the service agreement with DELCORA.

This amendment changed the rate model used to calculate DELCORA's share of the LTCP costs for Philadelphia. The new rate model reduces DELCORA's share from 9.44% ($605,000,000) to

0.21% ($*3,458,000), a reduction of almost 98%. DELCORA approved the amendment and the new rates became effective on November .2023. The following illustrates the cost impact of the amendment. For the period November 1, 2022, through October 3° , 2023, DELCORA was charged approximately $2,429,000 for its share of the PWD LTCP. For the period November .2023, through October 3', 2024, that amount was reduced to approximately $09,000. The current contract expires in 2028. DELCORA is actively working with PWD to extend the current contract.

Previous audits discussed the construction of very costly infrastructure (i.e.: a tunnel) to redirect

DELCORA's wastewater from PWD to the DELCORA treatment plant in Chester. The dramatic

PWD cost reduction discussed above prompted the DELCORA Board to reevaluate the construction of the tunnel to redirect wastewater to Chester. The DELCORA Board adopted a resolution on November 2°, 2023, which functionally placed the tunnel on the back burner. In accordance with the Board's resolution, land acquisition for a possible future tunnel continues.

Management's Discussion and Analysis (Unaudited) December 3%, 2025

The Combined Sewer Overflow Long-Term Control Plan (CSO LTCP) Update Report and the Nine Minimum Controls (NMC) Plan were submitted on February 37, 20/9. On January 25, 202°, and February 5, 202, an updated version of the LTCP Update and Nine Minimum Controls were submitted. The NMC Plan was approved. The LTCP Update was resubmitted on March 2022.

DELCORA has since updated the NMC Plan, most recently in June 2022, to provide additional information in accordance with commitments DELCORA made in the NMC Plan submitted on June A, 2027. This 2022 version of the LTCP Update assumed that the DELCORA Wastewater Tunnel Pro ect tunnel discussed above would be constructed. PWD's rate change and subsequent Board action resulted in needing to change the LTCP. The DELCORA Wastewater Tunnel Pro ect was put on hold by the DELCORA Board of Directors in November 2023. As reported in the 2024 audit report, a revised LTCPU was submitted in 2024 as a summary of proposed CSO improvemenis.

This approach was requested by EPA. Subsequently, EPA reviewed the summary and in early 2025 requested that the full LTCP be updated to integrate the proposed improvements. The DELCORA CSO LTCP team developed the Clean Creeks Program as the selected alternative and drafted a revised LTCPU, which was submitted in June 2025 to PADEP and USEPA. Comments on the June 2025 LTCPU were received from USEPA in October 2025 and a revised LTCPU was submitted in December 2025 and approved March 23, 2026.

On February 6, 2026, The City filed a complaint ("Complaint") with the Bankruptcy Court (Adversary Proceeding No. 26-00 "0 ("Adversary Proceeding")) against DELCORA and Aqua Pennsylvania Wastewater, Inc. ("Aqua") requesting:

A declaratory judgment against DELCORA and Aqua that the assets included in line "5.7 of the Agreement ("2973 Agreement') between the City, the Chester Sewer Authority, DELCORA, dated February 2, "973, are all the assets of DELCORA necessary for the City to operate a sewer system within the City excluding the 2 categories of specifically excluded assets from §° 5.7 ("Reversionary Provision");

« A preliminary and permanent injunction prohibiting DELCORA from transferring the assets sub ect to the Reversionary Provision to Aqua or any other party other than the City;

x A declaratory judgment against DELCORA and Aqua that the assignment of the 1973

Agreement under the APA would violate the anti-assignment provision of the 1973 Agreement and that any such provision is unenforceable;

= A declaratory judgment against DELCORA from assigning the "973 Agreement to Aqua or any other party without the City's consent;

» A declaratory judgment against DELCORA and Aqua that failure of the APA to provide for payment or preservation of the revenue stream as required by a certain easement ('Easement') between DELCORA and City violates the Easement and that any such provision in the APA without payment or preservation of such revenue stream is unenforceable; and

A preliminary and permanent injunction prohibiting DELCORA from assigning such Easement to Aqua or any other party in violation of such Easement;

« A preliminary and permanent injunction prohibiting DELCORA from consummating transactions in the APA in breach of the "973 Agreement.

- On March 23, 2026, DELCORA filed a Response and Affirmative Defenses to the Complaint and a Cross-C aim ("Cross-Claim') against Aqua.

- On April 3, 2026, Aqua filed a Response and Affirmative Defenses to the Cross-Claim.

On April "7, 2026, Aqua filed an Amended Response, Affirmative Defenses and Counter-Claim to the Complaint.

DELCORA sent an average of "9.66 million gallons per day (MGD) in 2025 to the Philadelphia Water Department's (PWD) Treatment Plant vs. 22.80 MGD in 2024. Flow in 2025 at DELCORA's Western Regional Treatment Plant (WRTP) was 3°.5 MGD vs. 35.57 MGD in 2024. In 2025, rainfall was 35.39 inches compared to 2024's rainfall of 391.4 inches. Rainfall is as measured by the National Weather Service at Philadelphia International Airport.

In 2025, revenue from the trucked waste receiving business was $9,683,444, an increase of $3,°83,444 (67.0%) over the 2025 budget and a decrease of $395,587 (4.00%) from the prior year.

Ma or Capital Pro ects Completed in 2025 Include:

Municipal 1&l Reduction Phase 2 $5,°85,627 Municipal l&l Engagement $5,736,306 Belt Filter Press Rep acement Pro.ect $ ,890,000 Submersible Pumps $ 96°,50 Grease Concentrator Spare Parts $ 600,449

Ma.or Pro.ecis in Progress in 2025:

WRTP Plant Upgrades $4 59274 B-3 UPS Install $3 539,58% Beech St Pump Station - Ridge Rd. Force Main $3 336,658 WRTP Corrosion Repair & Lower Chichester $2 022,366 Plant Services Contract $° 999,0°" WRTP Outtfall Hydraulic Diffuser $° 488,853

Management's Discussion and Analysis (Unaudited) December 3°.2025

Summary of Organization and Business

The Delaware County Regional Water Quality Control Authority (DELCORA) is a body, politic and corporate, created October 20, 97%, by a resolution of the Council of the County of Delaware, Pennsylvania, the County, under an Act of General Assembly of the State, approved May 2, "945, P.L.

382, as amended and supplemented, known as the Municipality Authorities Act of 945, as amended (the "Act')

The governing body of DELCORA is a Board of Directors consisting of nine members appointed by the Delaware County Council. The Board is authorized to exercise any and all powers conferred by the aforementioned Act necessary for the acquisition, construction, improvement, extension, maintenance and operation of the system facilities. A Board Member's term is for 5 years. The terms of the Board members are staggered.

DELCORA does not have taxing power. Ongoing operations are funded from customer revenues.

The acquisition and construction of capital assets are funded by capital borrowing, contributions from developers, Federal and State grants and loans, and customer revenues.

The system is divided into two regions: the Eastern Service Area and the Western Service Area.

Each is served by a regional wastewater treatment plant. DELCORA is responsible for building and operating interceptors, force mains and pump stations in both regions, building the regional treatment plant in the Western Service Area, and acquiring capacity at the Philadelphia Water Department's Southwest Water Pollution Control Plant (SW WPCP) for wastewater treatment for the Eastern Service Area.

DELCORA currently owns and operates sewer collection systems serving eight municipalities: the City of Chester, parts of the Township of Chester, and the Boroughs of Parkside, Upland, Trainer, Marcus Hook, Rose Valley, and Edgmont. In addition, DELCORA owns and operates 2 treatment plants in housing developments in Pocopson Township, Chester County.

DELCORA History & Background e Late *960's-Delaware County recognized the need for a regional wastewater management plan e All 49 Municipalities designated the Delaware County Planning Commission to develop the plan e First phase ( 97 )-Identified problems, future needs, alternate solutions e Second Phase ("972)-Regional plan divided the county into Eastern and Western services areas e Eastern Flows (about 50MGD) conveyed to PWD's Southwest Water Po lution Control

Plant e Western Flows consisting of mixed Municipal/Industrial Waste (Sun Oil, Scott Paper, FMC) conveyed to a new 44MGD, $50MM plant in Chester e Federal construction grants (~$° 00MM) utilized in Delaware County and the City of

Philadelphia e DELCORA was created by the County to implement the plan

Management's Discussion and Analysis (Unaudited) December 3%, 2025

Overview of Annual Financial Report

Management's Discussion and Analysis (MD&A) serves as an introduction to the basic financial statements and supplementary information. The MD&A represents management's analysis of DELCORA's financial condition and performance. Summary financial statement data, key financial and operational indicators, the current year budget, bond resolutions, and other management tools were used for this analysis.

The financial statements report information on DELCORA using full accrual accounting methods utilized by similar business activities in the private sector.

The financial statements inc ude a statement of net position; a statement of revenues, expenses, and changes in net position; a statement of cash flows; and notes to the financial statements. The statement of net position presents the financial position of DELCORA on a full accrual historical cost basis. While the statement of net position provides information about the nature and number of resources and obligations at year-end, the statement of revenues, expenses, and changes in net position presents the results of the business activities over the course of the fiscal year and the amounts by which the net assets changed during the year. All changes in net position are reported concurrently with the occurrence of the underlying event giving rise to the change, regardless of the timing of the related cash flows. This statement also provides certain information about DELCORA's recovery of its costs.

The statement of cash flows reports changes in cash and cash equivalents resulting from operations, financing, and investing activities. This statement presents cash receipts and cash disbursement information, without consideration of the earnings event, the timing of any arising obligations, or depreciation of capital assets.

The notes on the financial statements provide required disclosures and other information that is essential to a full understanding of the financial data provided in the statements. The notes also present information about DELCORA's accounting policies, significant account balances and activities, material risks, obligations, commitments, contingencies, and subsequent events, if any. Supplementary information comparing the budget to actual expenses, as well as statements of operating expenses, is also provided.

The financial statements were prepared by DELCORA's staff from detailed books and records of DELCORA. The financial statements were audited and adjusted, if the adjustments were material, during the independent external audit process.

DELCORA uses the rate model developed by Municipal & Financial Services Group. Rate setting policies employ different methods of cost recovery not fully provided by generally accepted accounting principles. The primary ob ective of a rate model is to improve upon the equitable al ocation of costs among customer classes and to ensure that capital costs are allocated based on long-term capacity needs, following the axiom that growth pays for growth.

Management's Discussion and Analysis (Unaudited) December 31, 2025

Financial Analysis

The following comparative general information and condensed financial statements serve as the key financial data and indicators for management, monitoring and planning. Comments regarding budget-to-actual variances and actual year-to-year variances are included in each section by the name of the statement or account.

2024 2025 Difference %

Revenues per thousand gallons billed:

Residential $4.17 $4.63 .46 11.0

Commercial $3.93 $4.50 .57 14.5

Ratio ofOperating Revenue to:

-Operating Expenses 1.38 1.31 (.07) (5.1)

1.66 1.61 (3.0) -Operating Expenses, net of depreciation (.05)

-Total assets (asset turnover) 0.19 0.19 .00 0.0

Ratio ofOperating Income to:

0.28 0.24 .04 -Operating Revenue (14.3)

Debt-related ratios:

Total debt to total assets 0.30 0.27 (.03) (10.0)

Financial Results of System-wide Operations

- Total Liabilities $ 155,222, 9°2

Long Term $ 125,067,490 Other $ 30,°6".422

- Total Net Assets $ 318,152,482 Invested in capital assets (net of related debt) $ 232,25" ,985 Restricted for Debt Service $ 70,860,202 Unrestricted $ 75,040,295

- Revenues (By source) Commercial Industries $ 23,495,759 Residential 66,400,3° 0

Total Operating Revenue >89,896,069

Management's Discussion and Analysis (Unaudited) December 31, 2025

2025 Actual Compared to 2025 Budget Results:

Actual Budget Difference

Total Revenues $93,546,003 $95,942,043 ($2,396,040) Unfavorable

Operating Expenses (Net of Depreciation and Debt Service) $55,837,66° $6° .595,792 $5,758, 3° Favorable

Total revenue is $93,546,003 - 2.5% lower than the budget of $95,942,043. This unfavorable variance in revenue was due to the flow shortfall from Municipal Authorities which was the result of lower than usual rainfall. This was partially offset by favorable variances in hauled waste revenue and interest income.

Significant variances to budget in operating expenses are as follows:

Legal and Consulting - These expenses were a combined $98" ,600 under budget, as amounts budgeted for the Aqua purchase, The City of Chester Bankruptcy and other litigation were not spent.

Pension Expense - This was under budget by $*,483,073. DELCORA made its Minimum

Municipal Obligation (MMO) payment of $2,307,995 for the year. The favorable expense variance was following the updated MMO review requirement done by the Actuary, which determined a significantly lower

MMO requirement. As of December 3' , 2025, DELCORA's pension fund was "27.28% funded. DELCORA is on target to make its MMO contribution in 2026 of $" 05,998.

Minor Equipment and Supplies, Including Chemicals - This was over budget by $*,709,27° as this includes expenses for chemicals used in the treatment process. The price of chemicals, particularly chlorine and polymer, increased significantly in 2025 above budgeted levels.

Outside Engineering and Contracted Services - These were under budget by a combined

$° .688,276, as needs for outside engineering services were significantly lower than budgeted.

Management's Discussion and Analysis (Unaudited) December 31%, 2025

2025 Actual Compared to 2024 Actual Results:

Operating Revenues and Expenses: DELCORA has various classes of wastewater customers depending on assets used in conveying flow to both the Philadelphia and Chester plants. Retail residential sewer rates increased from $7.69 to $8.00 per ,000 gallons (a 4.03% increase) from calendar year 2024 to 2025. Retail Residential customers are Chester City, Chester and Edgmont Townships, and the

Boroughs of Parkside, Upland, Marcus Hook, Trainer, and Rose Valley. They also include housing developments in Pocopson Township and Springhill Farms Condominium complex, and adjacent businesses. Total operating revenues increased $787,277 in 2025 from 2024, a 0.1% increase. The increase was not more significant due to some unforeseen increases in specific expense categories as well as a lower than anticipated year for rainfall in 2025.

The following table shows the composition of wastewater operating expenses by major classification of expense for the last two fiscal years.

2024 % of Total 2025 % of Total Variance % Change

PWD Plant Treatment S 12,118,774 18.8% $ 12,008,089 17.5% S$ (110,685) -0.9%

Salary & Wages 16,904,070 26.2% 17,975,240 26.2% $ 1,071,170 6.3%

Depreciation & Amortization 11,868,239 18.4% 12,802,048 18.7% S$ 933,809 7.9%

Utilities 4,318,343 6.7% 4,523,827 6.6% $ 205,484 4.8%

Pension 1,176,059 1.8% 1,118,922 1.6% S$ (57,137) -4,.9%

Employee Benefits 4,830,137 7.5% 5,614,197 8.2% S$ 784,060 16.2%

Solids Disposal 1,421,008 2.2% 2,099,998 3.1% § 678,990 47.8%

Repairs & Maintenance 4,131,469 6.4% 3,834,742 5.6% § (296,727) -7,.2%

Engineering & Tech Services 443,366 0.7% 570,891 0.8% S$ 127,525 28.8%

Legal Fees 304,418 0.5% 267,934 0.4% $ (36,484) -12.0%

Provision for Doubtful Accounts 46,756 0.1% 101,835 0.1% S 55,079 117.8%

Minor Equipment and Supplies 4,429,765 6.9% 4,979,697 7.3% 5 549,932 12.4%

Insurance 1,233,330 1.9% 1,226,794 1.8% § (6,536) -0.5%

Other Operating Expenses 1,240,907 1.9% 1,515,495 2.2% § 274,588 22.1%

Total Operating Expenses S 64,466,641 100.0% S 68,639,709 100.0% S$ 4,173,068 6.5%

PWD Treatment Costs - 2025 treatment costs were lower than 2024 by 0.9% ($ 70,658) due to lower flow in 2025 than in 2024, because of lower rainfall.

Depreciation - Increased by $933,809 or 7.9% from 2024 to 2025 due to several significant pro ects that have been completed and placed in service in 2024 and 2025.

Salaries and wages - Increased by $7,07' , A 70 due to an overall 4.0% salary and wages increase, as well as several new positions being added.

Management's Discussion and Analysis (Unaudited) December 3", 2025

Supplies - This increased by $549,932 or 12.4% as the price for all chemicals used in the treatment process, particularly polymer and chlorine, increased significantly in 2025 from 2024.

Cash Flow Activity

The following table shows DELCORA's ability to generate net operating cash. Net cash provided by operating activities is shown both in total dollars and as a percentage of operating revenues.

Net cash flow from operations increased by $5,133,5"3 to $39,445,73 in 2025 from 2024.

2024 2025 Difference % Change

Total operating revenues $89,108,792 589,896,069 $787,277 0.1%

Net cash provided by operations $34,311,660 $39,445,173 $5,133,513 15.0%

Net operating cash as a % of operating revenue 38.5% 43.8%

Rate Covenant

In the Bond Resolution, DELCORA covenants and agrees that it will, at all times, prescribe and maintain, and thereafter collect rates and charges for the services and facilities furnished by DELCORA, together with other income, that will yield annual income from operations before depreciation in the calendar year equal to at least one hundred ten percent (""0%) of the sum of the annual debt service payments.

The rate covenant in the Bond Resolution obligates DELCORA to review rates not less than once a year and to revise such rates and charges as necessary to meet the coverage test.

2025 Operations

WRTP-Water Quality Performance

« Average Suspended Solids - "5 mg/L for the year » Average cBOD5 - 10 mg/L for the year

Average cBOD5 % Removal - 96.28% for the year

WRTP-Solids Handling Performance

» Average Dry Tons/Day ~ 5" .26 tons for the year » Average Cake Solids - 9.93% for the year » Average Fuel Oil Usage - «2.47 MCF/Dry Ton for the year

Wastewater Conveyed and Treated

» Western Delaware County To WRTP, including 8.78 MGD from CDCA - ~ 3°.5 MGD « Eastern Delaware County to Philadelphia Southwest Treatment Plant- ~° 9.66 MGD

TO CONTACT MANAGEMENT AND REQUESTS FOR INFORMATION

This financial report is designed to provide our cients, taxpayers, customers, investors and creditors with a general overview of the Organization's finances and to demonstrate DELCORA's accountability of its funds. If you have questions regarding this report or would like additional information, contact the Chief

Financial Officer at a "00 East 5 Street, Chester, Pennsylvania

* 9013.

DELAWARE COUNTY REGIONAL WATER QUALITY

CONTROL AUTHORITY

STATEMENTS OF NET POSITION

DECEMBER 31,

ASSETS

Current Cash and cash equivalents Investments Receivables Western Region Residental, net of allowance for doubtful accounts of $975,476 and $875,3* 05 in 2025 and 2024, respectively

Municipal Major industries Permit industries

Other receivables Prepaid expenses

Total current assets Non current:

Capital assets, net of accumulated depreciation Right to use asset Restricted cash and cash equivalents Resticted investments Pension funding

Total non current assets

DEFERRED OUTFLOWS OF RESOURCES

Deferred expense on refunding Pension plan related deferred outflows

Total assets and deferred outflows of resources

LIABILITIES

Current liabilities:

Accounis payable and accrued expenses Payable to the City of Philadelphia Current portion of long-term debt Accrued bond interest payable Current portion of operating lease liability Advances on services

Eastern Region Residential Central Delaware County Authority Muckinipates Authority Darby Creek Joint Authority Maor industries

Total current liabilities

Noncurrent Operating lease liability - net of current protion Long term debi, net of current portion Deferred compensation plan

Total non current labilities Total liabilities

DEFERRED INFLOWS OF RESOURCES

Pension plan related deferred inflows

Total liabiltties and deferred inflows of resources

NET POSITION

Invested in capital assets, net of related debt Restricted for debt service Unrestricted

Total net position

TOTAL LIABILITIES AND NET POSITION

The accompanying notes to the financial statements are an integral part of these statements.

2025 2024

$ 73,900,743 $ 78,783,576 11,439,703 9,323,948

2,706,24 2,725.99 2,588,927 2,572 995 891,663 421 032 10,854 .42 430

"903,936 2,403 911

614,408 696 498 9456,358 96,469 589

364,552,726 338,900 077 53,884 59 935

860,202 1,722 473 10,000,000 -2,500 000 7,761,675 4,078 517

383,228,487 357,260 996

2,162,871 2,434 645 3,978,486 5,476 599

483,526,202 $ 461,641,829

$ 1,304,502 $ 6,800,244 2,287,099 1,997,207 8,064,561 7,967,220 925,825 979,249 38,18 39,864

209,212 194,043 2,141,047 1,236,* 96

1,047,054 668,28 2,928,359 1,773,553 "245,645 875,971

30,61 ,422 22,53 675

15,766 20,07" -24,236,°78 13,397,158

809,546 745,066 125,061,490 132,162,295 65,222,9°2 "54,693,970

"0,150,808 9,363,880 "65,373,720 164,057,850

232,25' .987 180,237,083 10,860,202 1,722,473 75,040,293 175,624,423

3° 8,152,482 297,583,979 $ 483,526,202 $ 461,647,829

STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

FOR THE YEARS ENDED DECEMBER 31,

2025 2024 Operating revenues Western Region:

Major Industries 40,597 69. $ 9,777,875 Residential "2,782 39° 12,153,726 Municipa "2,602 889 .2,827,988 Contract operation fees 637 203 604,45° Permit Industries 2,577 427 * .987,292

Total Western Region 39,°97595 37,357 ,332

Eastern Region:

Darby Creek Joint Authority 24,326,402 24,451,958 Central Delaware County Authority 11,644,700 12,028,678 Muckinipates Authority 5,043,928 5,797,853

Total Eastern Region 41,015,030 41,678,429

Sludge disposal and processing 9,683,444 10,079,031 Total operating revenues 89,896,069 89,708,792

Operating expenses, including depreciation of

$ 2,802.048 in 2025 and $ 868,239 in 2024 68,639,709 64,466,641 Operating income 21,256,360 24,642,5

Non-operating revenues (expense) Interest income 3,444,358 4,097,737 Interest expense (5,74° +854) (6,.86,451) Bond premium amortization 908,363 +,05*,077 Other income 205,576 138,648

Total non-operating revenues (expense) ( 783,557) (898,989)

Net income before capital contributions 20,072,803 23,743,162

Capital contributions 495,700 89,650 Net income 20,568,503 23,832,812

Net position - beginning 297,583,979 213,757 (67

Net position - ending $ 3°8,52,482 §$ 297,583,979

The accompanying notes to the financial statements are an integral part of these statements. 15

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

2025 2024

Cash flows from operating activities

Receipts from customers $ 92,153,556 § 88,49 847

Payments to suppliers (30,285,267) (28,706,463)

Payments to employees (22,423,* 16) (25,473,724)

Net cash provided by operating activities 39,445,173 34,311,660

Cash flows from capital and related financing activities:

Acquisition and construction of capital assets (38,192,747) (79,426,24)

Capital contributions 495,700 89,650

Other income 205,576 138,648

Interest paid (5,688,430) (6,283,560)

Repayment of long-term debt (7,063,639) (70,3891) Net cash used by capital and related financing activities

Cash flows from investing activities

Investments redeemed / (purchased), net 2,149,078 (3,895,057)

Investment interest received 3,766,456 4,202,775

Net cash provided by investing activities 5,915,534 307,724

Net decrease in cash and cash equivalents (4,882,833) (1,244,003)

Cash and cash equivalents - beginning 78,783,576 80,027,579

Cash and cash equivalents - ending 9 73,900,743 $78,783,576

Reconciliation of operating income to net cash provided by operating activities:

Operating income $ 21,256,360 $ 24,642,157

Adjustments to reconcile operating income to net cash provided by operating activities:

Depreciation 12,802,048 "1,868,238

Provision for doubiful accounts "0°.835 46,756

Decrease (increase) In.

Receivables:

Residential (580,925) (356,776)

Municipal (15,932) "0 4,628

Major industries (470,631) (87,33) Permit industries 3° ,576 24,124

Other receivables 499,973 (639,397)

Prepaid expenses 82,090 (495,070)

Increase (decrease) in:

Accounts payable and accrued expenses 4,504,258 67,856

Pension expense adjustment (" 848,797) (1,276,453)

Payable to the City of Philadelphia 289,892 75,066

Advances on services 2,793,426 (572,217)

Net cash provided by operating activities $ 39,445,73 S$ 34,347,659

(50,243,540) (35,863,387)

The accompanying notes to the financial statements are an integral part of these statements, 16

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

NOTE 1 - Summary of Significant Accounting Policies

Nature of Operations - Delaware County Regional Water Quality Control Authority ("DELCORA") was created by the County Council of Delaware County, Pennsylvania, on October 20, 1971, pursuant to the Municipality Authorities Act of 1945. DELCORA has the power to construct, finance, operate and maintain sewer systems throughout Delaware County and adjacent areas included in its drainage basin.

Reporting Entity - The reporting entity has been defined in accordance with the criteria established in Statement <4 issued by the Governmental Accounting Standards Board (GASB) and as amended by GASB Statement 61. The specific criteria used in determining whether DELCORA should be included in another organization's financial reporting entity are financial accountability, fiscal dependency and legal separation.

As defined above, DELCORA should not be included in another organization's financial statements.

Basis of Presentation - DELCORA's financial statements are prepared in accordance with accounting principles generally accepted in the United States ofAmerica (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations).

DELCORA's accounts are organized as a governmental enterprise fund, and are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis are financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.

DELCORA distinguishes operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with DELCORA's principal ongoing operations. Operating revenues are charges to customers for services provided. Operating expenses include the cost of services, administrative expenses and depreciation of capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

Basis of Accounting - The financial statements are prepared on the accrual basis of accounting.

Revenues are recognized when earned and expenses are recognized when incurred.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

NOTE 1 - Summary of Significant Accounting Policies (continued)

Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents DELCORA considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Statements of Cash Flows - For the purposes of the statements of cash flows, cash and cash equivalents are defined to be cash on hand, demand deposits, and highly liquid investments with a maturity of three months or less from the date of purchase (as noted above). For financial statement presentation purposes, cash and cash equivalents are shown accordingly.

Investments include certificates of deposit with a maturity of over three months from the date of purchase.

Capital Assets - Capital assets have been financed primarily through proceeds from various bond issues, grants from the Environmental Protection Agency and funds generated from ongoing operations. Capital assets are recorded at cost. If actual cost could not be determined from available records, estimated historical cost was used.

Depreciation is computed using the straight-line method over the estimated useful lives of the related assets as follows:

Western Region Treatment 5-40 Years Plant Service Lines 10-60 Years Force Mains Pumping 10-40 Years Stations 5-10 Years

Machinery and Equipment 40 Years investments - Investments represent funds established under various trust indentures and secured sewer revenue bonds outstanding. Restricted investments are reserved for liquidation of specific obligations. Investments are stated at fair value.

Advances on Services - Advances on services represents user charges collected in excess of the user's respective share of operating expenses.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2025 AND 2024

NOTE 1 - Summary of Significant Accounting Policies (continued)

Vacation, Sick Leave and Other Compensated Absences - DELCORA employees are entitled to certain compensated absences based on their length of employment. Compensated absences are accrued when earned.

Allowance for Doubtful Accounts - Provisions for doubtful accounts are provided for on the reserve method based on historical experience and management's evaluation of outstanding residential receivables.

Deferred Outflows/Inflows of Resources - DELCORA reports decreases in net assets that relate to future periods as deferred outflows of resources in the statements of net position. DELCORA reports deferred outflows of resources for contributions made to the defined benefit pension plan between the measurement date of the net pension liability and DELCORA's year end. The statement of financial position also reports a section for deferred inflows of resources that represent an acquisition of net position that applies to a future period and so not be recognized as an inflow of resources (revenue) until that time. DELCORA reports deferred inflows of resources related to the pension.

NOTE 2 - Deposits and Investments

Under Section 7.1 of the Pennsylvania Municipality Authorities Act and the Trust Indenture, DELCORA is permitted to invest funds consistent with sound business practices in the following types of investments:

e Obligations of the United States government or its agencies or instrumentalities;

e Obligations of the Commonwealth of Pennsylvania or any of its political…