10-Q 1 cpk-20240331.htm 10-Q cpk-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                       to                      
Commission File Number: 001-11590 
CHESAPEAKE UTILITIES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 51-0064146
(State or other jurisdiction
of incorporation or organization)
 (I.R.S. Employer
Identification No.)
500 Energy Lane, Dover, Delaware 19901
(Address of principal executive offices, including Zip Code)
(302) 734-6799
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock - par value per share $0.4867CPKNew York Stock Exchange, Inc.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No   

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company




If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Common Stock, par value $0.486722,270,177 shares outstanding as of May 6, 2024.


Table of Contents
 



GLOSSARY OF DEFINITIONS
ASC: Accounting Standards Codification issued by the FASB
Adjusted Gross Margin: A non-GAAP measure calculated by deducting the purchased cost of natural gas, propane and electricity and the cost of labor spent on direct revenue-producing activities from operating revenues. The costs included in Adjusted Gross Margin exclude depreciation and amortization and certain costs presented in operations and maintenance expenses in accordance with regulatory requirements
Aspire Energy: Aspire Energy of Ohio, LLC, a wholly-owned subsidiary of Chesapeake Utilities
Aspire Energy Express: Aspire Energy Express, LLC, a wholly-owned subsidiary of Chesapeake Utilities
ASU: Accounting Standards Update issued by the FASB
ATM: At-the-market
CDD: Cooling Degree-Day
Chesapeake or Chesapeake Utilities: Chesapeake Utilities Corporation, its divisions and subsidiaries, as appropriate in the context of the disclosure
CHP: Combined Heat and Power Plant
Company: Chesapeake Utilities Corporation, and its divisions and subsidiaries, as appropriate in the context of the disclosure
CNG: Compressed natural gas
Degree-day: Measure of the variation in the weather based on the extent to which the average daily temperature (from 10:00 am to 10:00 am) falls above (CDD) or below (HDD) 65 degrees Fahrenheit
Delmarva Peninsula: A peninsula on the east coast of the U.S. comprised of Delaware and portions of Maryland and Virginia
Diversified Energy: An entity from whom we acquired certain propane operating assets in North Carolina, South Carolina, Virginia, and Pennsylvania
DRIP: Dividend Reinvestment and Direct Stock Purchase Plan
Dt(s): Dekatherm(s), which is a natural gas unit of measurement that includes a standard measure for heating value
Dts/d: Dekatherms per day
Eastern Shore: Eastern Shore Natural Gas Company, a wholly-owned subsidiary of Chesapeake Utilities
Eight Flags: Eight Flags Energy, LLC, a wholly-owned subsidiary of Chesapeake Utilities

Elkton Gas: Elkton Gas Company, a wholly-owned subsidiary of Chesapeake Utilities

FASB: Financial Accounting Standards Board

FCG or Florida City Gas: Pivotal Utility Holdings, Inc, doing business as Florida City Gas, a wholly-owned subsidiary of Chesapeake Utilities that was acquired from Florida Power & Light Company on November 30, 2023
FERC: Federal Energy Regulatory Commission
FGT: Florida Gas Transmission Company
Florida Natural Gas: Refers to the Company's legacy Florida natural gas distribution operations (excluding FCG) that were consolidated under FPU, for both rate-making and operations purposes
Florida OPC: The Office of Public Counsel, an agency established by the Florida legislature who advocates on behalf of Florida's utility consumers prior to actions or rule changes
FPU: Florida Public Utilities Company, a wholly-owned subsidiary of Chesapeake Utilities


GAAP: Generally Accepted Accounting Principles
Gross Margin: a term under U.S. GAAP which is the excess of sales over costs of goods sold
GUARD: Gas Utility Access and Replacement Directive a program to enhance the safety, reliability and accessibility of portions of the Company’s natural gas distribution system in Florida
Gulfstream: Gulfstream Natural Gas System, LLC, an unaffiliated pipeline network that supplies natural gas to FPU
HDD: Heating Degree-Day
LNG: Liquefied Natural Gas
Marlin Gas Services: Marlin Gas Services, LLC, a wholly-owned subsidiary of Chesapeake Utilities
MetLife: MetLife Investment Advisors, an institutional debt investment management firm, with which we have previously issued Senior Notes and which is a party to the current MetLife Shelf Agreement, as amended
MGP: Manufactured gas plant, which is a site where coal was previously used to manufacture gaseous fuel for industrial, commercial and residential use
Peninsula Pipeline: Peninsula Pipeline Company, Inc., a wholly-owned subsidiary of Chesapeake Utilities
Prudential: Prudential Investment Management Inc., an institutional investment management firm, with which we have previously issued Senior Notes and which is a party to the current Prudential Shelf Agreement, as amended
PSC: Public Service Commission, which is the state agency that regulates utility rates and/or services in certain of our jurisdictions
Revolver: Our $375.0 million unsecured revolving credit facility with certain lenders
RNG: Renewable natural gas
RSAM: Reserve surplus amortization mechanism which has been approved by the Florida PSC and is applicable to FCG
Sandpiper Energy: Sandpiper Energy, Inc., a wholly-owned subsidiary of Chesapeake Utilities
SAFE: Safety, Access, and Facility Enhancement, a program to enhance the safety, reliability and accessibility of portions of the FCG's natural gas distribution system
SEC: Securities and Exchange Commission
Senior Notes: Our unsecured long-term debt issued primarily to insurance companies on various dates
Sharp: Sharp Energy, Inc., a wholly-owned subsidiary of Chesapeake Utilities
Shelf Agreement: An agreement entered into by Chesapeake Utilities and a counterparty pursuant to which Chesapeake Utilities may request that the counterparty purchase our unsecured senior debt with a fixed interest rate and a maturity date not to exceed 20 years from the date of issuance
Shelf Notes: Unsecured senior promissory notes issuable under the Shelf Agreement executed with various counterparties
SICP: Stock and Incentive Compensation Plan, which as used herein covers stock-based compensation awards issued under the current 2024 plan and the previous 2013 plan
SOFR: Secured Overnight Financing Rate, a secured interbank overnight interest rate established as an alternative to LIBOR
TCJA: Tax Cuts and Jobs Act enacted on December 22, 2017
TETLP: Texas Eastern Transmission, LP, an interstate pipeline interconnected with Eastern Shore's pipeline
Uncollateralized Senior Notes: Our unsecured long-term debt issued primarily to insurance companies on various dates
U.S.: The United States of America


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
 
Three Months Ended
March 31,
20242023
(in thousands, except per share data)  
Operating Revenues
Regulated Energy$168,426 $142,270 
Unregulated Energy83,103 83,166 
Other businesses and eliminations(5,785)(7,307)
Total Operating Revenues245,744 218,129 
Operating Expenses
Natural gas and electric costs49,918 55,288 
Propane and natural gas costs31,299 33,301 
Operations51,560 44,767 
FCG transaction and transition-related expenses921  
Maintenance5,903 5,104 
Depreciation and amortization17,016 17,183 
Other taxes9,542 7,571 
Total Operating Expenses166,159 163,214 
Operating Income79,585 54,915 
Other income, net195 276 
Interest charges17,026 7,232 
Income Before Income Taxes62,754 47,959 
Income taxes16,586 11,615 
Net Income$46,168 $36,344 
Weighted Average Common Shares Outstanding:
Basic22,250 17,760 
Diluted22,306 17,832 
Earnings Per Share of Common Stock:
Basic$2.07 $2.05 
Diluted$2.07 $2.04 
The accompanying notes are an integral part of these condensed consolidated financial statements.



1


Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 
Three Months Ended
March 31,
20242023
(in thousands)
Net Income$46,168 $36,344 
Other Comprehensive Income (Loss), net of tax:
Employee Benefits, net of tax:
Reclassifications of amortization of prior service credit and actuarial loss, net of tax of $4 and $3, respectively
13 10 
Cash Flow Hedges, net of tax:
Net gain on commodity contract cash flow hedges, net of tax of $534 and $7, respectively
1,441 22 
Reclassifications of net gain on commodity contract cash flow hedges, net of tax $(293) and $(166), respectively
(791)(440)
Net gain (loss) on interest rate swap cash flow hedges, net of tax of $143 and $(52), respectively
417 (148)
Reclassifications of net (gain) on interest rate swap cash flow hedges, net of tax of $(44) and $(17), respectively
(128)(48)
Total Other Comprehensive Income (Loss), net of tax952 (604)
Comprehensive Income$47,120 $35,740 
The accompanying notes are an integral part of these condensed consolidated financial statements.


2

Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
 
AssetsMarch 31,
2024
December 31,
2023
(in thousands, except per share data)  
Property, Plant and Equipment
Regulated Energy$2,470,135 $2,418,494 
Unregulated Energy416,833 410,807 
Other businesses and eliminations31,606 30,310 
Total property, plant and equipment2,918,574 2,859,611 
Less: Accumulated depreciation and amortization(530,832)(516,429)
Plus: Construction work in progress123,338 113,192 
Net property, plant and equipment2,511,080 2,456,374 
Current Assets
Cash and cash equivalents1,695 4,904 
Trade and other receivables 70,750 74,485 
Less: Allowance for credit losses(2,450)(2,699)
Trade and other receivables, net68,300 71,786 
Accrued revenue28,308 32,597 
Propane inventory, at average cost8,367 9,313 
Other inventory, at average cost19,638 19,912 
Regulatory assets24,289 19,506 
Storage gas prepayments1,147 4,695 
Income taxes receivable 3,829 
Prepaid expenses13,681 15,407 
Derivative assets, at fair value1,012 1,027 
Other current assets3,228 2,723 
Total current assets169,665 185,699 
Deferred Charges and Other Assets
Goodwill507,573 508,174 
Other intangible assets, net16,414 16,865 
Investments, at fair value13,221 12,282 
Derivative assets, at fair value126 40 
Operating lease right-of-use assets 11,719 12,426 
Regulatory assets86,039 96,396 
Receivables and other deferred charges16,047 16,448 
Total deferred charges and other assets651,139 662,631 
Total Assets$3,331,884 $3,304,704 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
 
Capitalization and LiabilitiesMarch 31,
2024
December 31,
2023
(in thousands, except per share data)  
Capitalization
Stockholders’ equity
Preferred stock, par value $0.01 per share (authorized 2,000 shares), no shares issued and outstanding$ $ 
Common stock, par value $0.4867 per share (authorized 50,000 shares)10,838 10,823 
Additional paid-in capital750,162 749,356 
Retained earnings521,689 488,663 
Accumulated other comprehensive income (loss)(1,786)(2,738)
Deferred compensation obligation9,562 9,050 
Treasury stock(9,562)(9,050)
Total stockholders’ equity1,280,903 1,246,104 
Long-term debt, net of current maturities1,185,166 1,187,075 
Total capitalization2,466,069 2,433,179 
Current Liabilities
Current portion of long-term debt18,511 18,505 
Short-term borrowing170,355 179,853 
Accounts payable63,058 77,481 
Customer deposits and refunds43,682 46,427 
Accrued interest17,148 7,020 
Dividends payable13,138 13,119 
Accrued compensation7,066 16,544 
Regulatory liabilities21,328 13,719 
Income taxes payable818  
Derivative liabilities, at fair value31 354 
Other accrued liabilities16,520 13,362 
Total current liabilities371,655 386,384 
Deferred Credits and Other Liabilities
Deferred income taxes271,335 259,082 
Regulatory liabilities193,030 195,279 
Environmental liabilities2,546 2,607 
Other pension and benefit costs16,010 15,330 
Derivative liabilities, at fair value43 927 
Operating lease - liabilities 9,832 10,550 
Deferred investment tax credits and other liabilities1,364 1,366 
Total deferred credits and other liabilities494,160 485,141 
Environmental and other commitments and contingencies (Notes 6 and 7)
Total Capitalization and Liabilities$3,331,884 $3,304,704 
    
The accompanying notes are an integral part of these condensed consolidated financial statements.


4

Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
20242023
(in thousands)  
Operating Activities
Net income$46,168 $36,344 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization16,909 17,183 
Depreciation and accretion included in other costs4,016 2,834 
Deferred income taxes11,905 2,453 
Realized (loss) on commodity contracts and sale of assets(1,811)(284)
Unrealized (gain) loss on investments/commodity contracts(830)(551)
Employee benefits and compensation(24)119 
Share-based compensation2,113 2,408 
Changes in assets and liabilities:
Accounts receivable and accrued revenue7,806 5,641 
Propane inventory, storage gas and other inventory4,769 5,373 
Regulatory assets/liabilities, net10,059 24,607 
Prepaid expenses and other current assets2,572 3,985 
Accounts payable and other accrued liabilities(10,114)(21,166)
Income taxes receivable/payable4,647 10,095 
Customer deposits and refunds(2,745)(476)
Accrued compensation(9,480)(8,436)
Accrued interest10,127 1,500 
Other assets and liabilities, net1,195 38 
Net cash provided by operating activities97,282 81,667 
Investing Activities
Property, plant and equipment expenditures(75,512)(42,418)
Proceeds from sale of assets250 506 
Acquisitions, net of cash acquired612  
Environmental expenditures(61)(742)
Net cash used in investing activities(74,711)(42,654)
Financing Activities
Common stock dividends(12,884)(9,492)
Issuance of stock under the Dividend Reinvestment Plan, net of offering fees41  
Tax withholding payments related to net settled stock compensation(1,466)(2,455)
Change in cash overdrafts due to outstanding checks715 (323)
Net repayments under line of credit agreements(10,213)(107,755)
Proceeds from long-term debt, net of offering fees 79,840 
Repayment of long-term debt(1,973)(1,967)
Net cash used in financing activities(25,780)(42,152)
Net Decrease in Cash and Cash Equivalents(3,209)(3,139)
Cash and Cash Equivalents—Beginning of Period4,904 6,204 
Cash and Cash Equivalents—End of Period$1,695 $3,065 
The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Chesapeake Utilities Corporation and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
 
 
Common Stock (1)
    
(in thousands, except per share data)
Number of
Shares(2)
Par
Value
Additional Paid-In
Capital
Retained
Earnings
Accumulated 
Other Comprehensive
Income (Loss)
Deferred
Compensation
Treasury
Stock
Total
Balance at December 31, 202217,741 $8,635 $380,036 $445,509 $(1,379)$7,060 $(7,060)$832,801 
Net income— — — 36,344 — — — 36,344 
Other comprehensive loss— — — — (604)— — (604)
Dividends declared ($0.535 per share)
— — — (9,644)— — — (9,644)
Issuance under various plans (3)
  (11)— — — — (11)
Share-based compensation and tax benefit (4) (5)
48 24 (322)— — — — (298)
Treasury stock activities (2)
— — — — — 1,756 (1,756) 
Balance at March 31, 202317,789 $8,659 $379,703 $472,209 $(1,983)$8,816 $(8,816)$858,588 
Balance at December 31, 2023 (6)
22,235 $10,823 $749,356 $488,663 $(2,738)$9,050 $(9,050)$1,246,104 
Net income— — — 46,168 — — — 46,168 
Other comprehensive income— — — — 952 — — 952 
Dividends declared ($0.590 per share)
— — — (13,142)— — — (13,142)
Issuance under various plans (3)
3 1 272 — — — — 273 
Share-based compensation and tax benefit (4) (5)
29 14 534 — — — — 548 
Treasury stock activities (2)
— — — — — 512 (512) 
Balance at March 31, 202422,267 $10,838 $750,162 $521,689 $(1,786)$9,562 $(9,562)$1,280,903 
 
(1)2.0 million shares of preferred stock at $0.01 par value have been authorized. No shares have been issued or are outstanding; accordingly, no information has been included in the Condensed Consolidated Statements of Stockholders’ Equity.    
(2)Includes 111 thousand, 108 thousand, 110 thousand, and 108 thousand shares at March 31, 2024, December 31, 2023, March 31, 2023 and December 31, 2022, respectively, held in a Rabbi Trust related to our Non-Qualified Deferred Compensation Plan.
(3)Includes shares issued under the Retirement Savings Plan and DRIP and/or ATM as applicable.
(4)Includes amounts for shares issued for directors’ compensation.
(5)The shares issued under the SICP are net of shares withheld for employee taxes. For the three months ended March 31, 2024 and 2023, we withheld 14 thousand and 20 thousand shares, respectively, for employee taxes.
(6)Includes 4.4 million shares issued during 2023 related to the acquisition of FCG. See Notes 3 and 9 for details associated with the FCG acquisition and related financing.

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.    Summary of Accounting Policies

Basis of Presentation

References in this document to the “Company,” “Chesapeake Utilities,” “we,” “us” and “our” are intended to mean Chesapeake Utilities Corporation, its divisions and/or its subsidiaries, as appropriate in the context of the disclosure.

The accompanying unaudited condensed consolidated financial statements have been prepared in compliance with the rules and regulations of the SEC and GAAP. In accordance with these rules and regulations, certain information and disclosures normally required for audited financial statements have been condensed or omitted. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto, included in our latest Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management, these financial statements reflect all adjustments that are necessary for a fair presentation of our results of operations, financial position and cash flows for the interim periods presented.

Where necessary to improve comparability, prior period amounts have been changed to conform to current period presentation.

Due to the seasonality of our business, results for interim periods are not necessarily indicative of results for the entire fiscal year. Revenue and earnings are typically greater during the first and fourth quarters, when consumption of energy is highest due to colder temperatures.

Recent Accounting Standards Yet to be Adopted
FASB
Segment Reporting (ASC 280) - In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segments Disclosures, which modifies required disclosures about a public entity’s reportable segments and addresses requests from investors for more detailed information about a reportable segment’s expenses and a more comprehensive reconciliation of each segment's reported profit or loss. ASU 2023-07 will be effective for our annual financial statements beginning January 1, 2024 and our interim financial statements beginning January 1, 2025. ASU 2023-07 only impacts disclosures, and as a result, will not have a material impact on our financial position or results of operations.

Income Taxes (ASC 740) - In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which modifies required income tax disclosures primarily related to an entity's rate reconciliation and information pertaining to income taxes paid. These enhancements have been made to address requests from investors related to transparency and usefulness of income tax disclosures. ASU 2023-09 will be effective for our annual financial statements beginning January 1, 2024. ASU 2023-09 only impacts disclosures, and as a result, will not have a material impact on our financial position or results of operations.

SEC
Climate-Related Disclosures - In March 2024, the SEC issued a final rule that requires a public entity to provide disclosures surrounding material Scope 1 and Scope 2 emissions, climate-related risks and the material impact of those risks and material climate targets and goals. In April 2024, the SEC issued a stay on the final rule as a result of various petitions being filed and that sought review of the final ruling in multiple courts of appeals. At this time, it is uncertain when the review will be completed, the final outcome of the review, and the ultimate disclosure requirements.

7

2.    Calculation of Earnings Per Share
Three Months Ended
March 31,
20242023
(in thousands, except per share data)  
Calculation of Basic Earnings Per Share:
Net Income$46,168 $36,344 
Weighted average shares outstanding (1)
22,250 17,760 
Basic Earnings Per Share$2.07 $2.05 
Calculation of Diluted Earnings Per Share:
Net Income$46,168 $36,344 
Reconciliation of Denominator:
Weighted shares outstanding—Basic (1)
22,250 17,760 
Effect of dilutive securities—Share-based compensation56 72 
Adjusted denominator—Diluted22,306 17,832 
Diluted Earnings Per Share$2.07 $2.04 
 (1) Weighted average shares for the quarter ended March 31, 2024 reflect the impact of 4.4 million common shares issued in November 2023 in connection with the acquisition of FCG. See Notes 3 and 9 for additional details on the acquisition and related equity offering.

3.     Acquisitions
Acquisition of Florida City Gas
On November 30, 2023, we completed the acquisition of FCG for $922.8 million in cash, which included working capital adjustments as defined in the agreement that were settled during the first quarter of 2024, pursuant to the stock purchase agreement with Florida Power & Light Company. Upon completion of the acquisition, FCG became a wholly-owned subsidiary of the Company and is included within our Regulated Energy segment.

FCG serves approximately 120,000 residential and commercial natural gas customers across eight counties in Florida, including Miami-Dade, Broward, Brevard, Palm Beach, Hendry, Martin, St. Lucie and Indian River. Its natural gas system includes approximately 3,800 miles of distribution main and 80 miles of transmission pipe.

The purchase price of the acquisition was funded with $366.4 million of net proceeds from the issuance of 4.4 million shares of our common stock, the issuance of approximately $550.0 million principal amount of uncollateralized senior notes, and borrowings under the Company's Revolver. See Note 14, Long-Term Debt, and Note 9, Stockholders' Equity, for additional details on these financing activities.
We accounted for the acquisition of FCG using the acquisition method. As FCG is a regulated utility, the measurement of the fair value of most of the assets acquired and liabilities assumed were determined using the predecessor’s carrying value. In certain other instances where assets and liabilities are not subject to regulation, we determined the fair value in accordance with the principles of ASC Topic 820, Fair Value Measurements.

The excess of the purchase price for FCG over the fair value of the assets acquired and liabilities assumed has been reflected as goodwill within the Regulated Energy segment. Goodwill resulting from the acquisition is largely attributable to expansion opportunities provided within our existing regulated operations in Florida, including planned customer growth and growth in rate base through continued investment in our utility infrastructure, as well as natural gas transmission infrastructure supporting the distribution operations. The goodwill recognized in connection with the acquisition of FCG will be deductible for income tax purposes.

The components of the preliminary purchase price allocation are as follows:

8

(in thousands) 
Assets acquired:Acquisition Date Fair Value
Cash$2,270 
Accounts receivable, net14,456 
Regulatory assets - current2,983 
Other current assets2,082 
Property, plant and equipment 454,410 
Goodwill 460,592 
Regulatory assets - non-current3,381 
Other deferred charges and other assets18,309 
Total assets acquired958,483 
Liabilities assumed:
Current liabilities(20,978)
Regulatory liabilities(14,137)
Other deferred credits and other liabilities(548)
Total liabilities assumed(35,663)
Net purchase price$922,820 

Direct transaction costs of $10.4 million associated with the FCG acquisition were reflected in “FCG transaction-related expenses” on our consolidated statement of income for the year ended December 31, 2023. In addition, interest charges included $4.1 million related to fees and expenses associated with the Bridge Facility, which was terminated without any funds drawn, for the year ended December 31, 2023. Other transaction costs of $15.9 million, related primarily to the debt and equity financings executed in connection with the acquisition, were deferred on the consolidated balance sheet or recorded in equity as an offset to proceeds received, as appropriate, as of December 31, 2023.
For the three months ended March 31, 2024, the Company’s consolidated results include $35.9 million of operating revenue and net income of $4.2 million attributable to FCG which includes $0.9 million of transaction and transition-related expenses.

Acquisition of J.T. Lee and Son's
In December 2023, Sharp acquired the propane operating assets of J.T. Lee and Son's in Cape Fear, North Carolina for $3.9 million. In connection with this acquisition, we recorded a $0.3 million liability which is subject to the seller's adherence to various provisions contained in the purchase agreement through the first anniversary of the transaction closing. Through this acquisition, we expanded our operating footprint in North Carolina, where customers are served by Diversified Energy. Sharp added approximately 3,000 customers and distribution of approximately 800,000 gallons of propane annually. The transaction also includes a bulk plant with 60,000 gallons of propane storage, enabling the Company to realize efficiencies with additional storage capacity and overlapping delivery territories.

In connection with this acquisition, we recorded $2.7 million in property plant and equipment, $0.9 million in goodwill, $0.2 million in working capital, and less than $0.1 million in intangible assets associated primarily with non-compete agreements, all of which are deductible for income tax purposes. The amounts recorded in conjunction with the acquisition are preliminary, and subject to adjustment based on contractual provisions and finalization prior to the first anniversary of the transaction closing. The financial results associated with this acquisition are included within our propane distribution operations within our Unregulated Energy segment. The operating revenues and net income of this acquisition were not material to our consolidated results for the three months ended March 31, 2024.



9

4.     Revenue Recognition
We recognize revenue when our performance obligations under contracts with customers have been satisfied, which generally occurs when our businesses have delivered or transported natural gas, electricity or propane to customers. We exclude sales taxes and other similar taxes from the transaction price. Typically, our customers pay for the goods and/or services we provide in the month following the satisfaction of our performance obligation. The following tables display our revenue by major source based on product and service type for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
(in thousands)Regulated EnergyUnregulated EnergyOther and EliminationsTotalRegulated EnergyUnregulated EnergyOther and EliminationsTotal
Energy distribution
Delaware natural gas division$31,917 $ $ $31,917 $36,907 $— $— $36,907 
Florida natural gas distribution
47,956   47,956 46,358 — — 46,358 
Florida City Gas35,877   35,877  — —  
FPU electric distribution19,964   19,964 22,737 — — 22,737 
Maryland natural gas division 9,855   9,855 12,263 — — 12,263 
Sandpiper natural gas/propane operations7,057   7,057 7,082 — — 7,082 
Elkton Gas2,859   2,859 4,141 — — 4,141 
Total energy distribution155,485   155,485 129,488 — — 129,488 
Energy transmission
Aspire Energy 13,608  13,608 — 13,954 — 13,954 
Aspire Energy Express369   369 364 — — 364 
Eastern Shore21,266   21,266 20,670 — — 20,670 
Peninsula Pipeline7,992   7,992 6,911 — — 6,911 
Total energy transmission29,627 13,608  43,235 27,945 13,954 — 41,899 
Energy generation
Eight Flags 4,555  4,555 — 5,300 — 5,300 
Propane operations
Propane delivery operations 61,572  61,572 — 59,980 — 59,980 
Compressed Natural Gas Services
Marlin Gas Services 3,428  3,428 — 4,001 — 4,001 
Other and eliminations
Eliminations(16,686)(60)(5,830)(22,576)(15,163)(69)(7,352)(22,584)
Other 45 45 —  45 45 
Total other and eliminations(16,686)(60)(5,785)(22,531)(15,163)(69)(7,307)(22,539)
Total operating revenues (1)
$168,426 $83,103 $(5,785)$245,744 $142,270 $83,166 $(7,307)$218,129 

(1) Total operating revenues for the three months ended March 31, 2024 and 2023 both include other revenue (revenues from sources other than contracts with customers) of $0.6 million and $0.1 million for our Regulated and Unregulated Energy segments, respectively. The sources of other revenues include revenue from alternative revenue programs related to revenue normalization for the Maryland division and Sandpiper Energy and late fees.


10

Contract Balances
The timing of revenue recognition, customer billings and cash collections results in trade receivables, unbilled receivables (contract assets), and customer advances (contract liabilities) in our condensed consolidated balance sheets. The balances of our trade receivables, contract assets, and contract liabilities as of March 31, 2024 and December 31, 2023 were as follows:
Trade ReceivablesContract Assets (Current)Contract Assets (Non-current)Contract Liabilities (Current)
(in thousands)
Balance at 12/31/2023$67,741 $18 $3,524 $1,022 
Balance at 3/31/2024
61,497 18 3,370 710 
Increase (Decrease)$(6,244)$ $(154)$(312)
Our trade receivables are included in trade and other receivables in the condensed consolidated balance sheets. Our current contract assets are included in other current assets in the condensed consolidated balance sheet. Our non-current contract assets are included in other assets in the condensed consolidated balance sheet and primarily relate to operations and maintenance costs incurred by Eight Flags that have not yet been recovered through rates for the sale of electricity to our electric distribution operation pursuant to a long-term service agreement.
At times, we receive advances or deposits from our customers before we satisfy our performance obligation, resulting in contract liabilities. Contract liabilities are included in other accrued liabilities in the condensed consolidated balance sheets and relate to non-refundable prepaid fixed fees for our propane distribution operation's retail offerings. Our performance obligation is satisfied over the term of the respective customer retail program on a ratable basis. For the three months ended March 31, 2024 and 2023, the amounts recognized in revenue were not material.

Remaining Performance Obligations
Certain of our businesses have long-term fixed fee contracts with customers in which revenues are recognized when performance obligations are satisfied over the contract term. Revenue for these businesses for the remaining performance obligations, at March 31, 2024, are expected to be recognized as follows:
(in thousands)2024202520262027202820292030 and thereafter
Eastern Shore and Peninsula Pipeline$27,404 $30,520 $26,668 $23,535 $22,657 $20,733 $128,891 
Natural gas distribution operations7,284 9,310 8,596 6,567 5,346 4,802 23,744 
FPU electric distribution562 749 364 364 364   
Total revenue contracts with remaining performance obligations$35,250 $40,579 $35,628 $30,466 $28,367 $25,535 $152,635 


5.     Rates and Other Regulatory Activities

Our natural gas and electric distribution operations in Delaware, Maryland and Florida are subject to regulation by their respective PSC; Eastern Shore, our natural gas transmission subsidiary, is subject to regulation by the FERC; and Peninsula Pipeline and Aspire Energy Express, our intrastate pipeline subsidiaries, are subject to regulation (excluding cost of service) by the Florida PSC and Public Utilities Commission of Ohio, respectively.

Delaware

In September 2023, the Delaware Division submitted the Energy Efficiency Rider application for natural gas with the Delaware PSC after obtaining an affirmative recommendation from the Delaware Energy Efficiency Advisory Council (“EEAC”). The application was the first in the state and included four programs including, Home Energy Counseling, Home Performance with Energy Star, Assisted Home Performance with Energy Star, and a standard Offer Program in which customers can participate and allow for recovery. The evidentiary hearing on this matter was held in April 2024 with all programs, with the exception of the Offer Program, approved by the PSC and rates became effective May 1, 2024.


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Maryland

Maryland Natural Gas Rate Case: In January 2024, our natural gas distribution businesses in Maryland, CUC-Maryland Division, Sandpiper Energy, Inc., and Elkton Gas Company (collectively, “Maryland natural gas distribution businesses”), filed a joint application for a natural gas rate case with the Maryland PSC. In connection with the application, we are seeking approval of the following: (i) permanent rate relief of approximately $6.9 million; (ii) authorization to make certain changes to tariffs to include a unified rate structure and to consolidate the Maryland natural gas distribution businesses which we anticipate will be called Chesapeake Utilities of Maryland, Inc.; and (iii) authorization to establish a rider for recovery of the costs associated with our new technology systems. The outcome of the application is subject to review and approval by the Maryland PSC. Rate changes are suspended until December 2024.

Maryland Natural Gas Depreciation Study: In January 2024, our Maryland natural gas distribution businesses filed a joint petition for approval of their proposed unified depreciation rates with the Maryland PSC. The outcome of the filing is subject to review by the Maryland PSC which is expected to be completed in the third quarter of 2024.

Florida

Wildlight Expansion: In August 2022, Peninsula Pipeline and FPU filed a joint petition with the Florida PSC for approval of its Transportation Service Agreement associated with the Wildlight planned community located in Nassau County, Florida. The project enables us to meet the significant growing demand for service in Yulee, Florida. The agreement will enable us to construct the project during the build-out of the community and charge the reservation rate as each phase of the project goes into service. Construction of the pipeline facilities will occur in two separate phases. Phase one consists of three extensions with associated facilities, and a gas injection interconnect with associated facilities. Phase two will consist of two additional pipeline extensions. The various phases of the project commenced in the first quarter of 2023, with construction on the overall project continuing through 2025. The petition was approved by the Florida PSC in November 2022.

FCG Natural Gas Rate Case: In May 2022, FCG filed a general base rate increase with the Florida PSC based on a projected 2023 test year. In June 2023, the Florida PSC issued an order approving a single total base revenue increase of $23.3 million (which included an incremental increase of $14.1 million, a previously approved increase of $3.8 million for a liquefied natural gas facility, and $5.3 million to transfer the SAFE investments from a rider clause to base rates), with new rates becoming effective as of May 1, 2023. The Commission also approved FCG's proposed RSAM with a $25.0 million reserve amount, continuation and expansion of the capital SAFE program, implementation of an automated metering infrastructure pilot, and continuation of the storm damage reserve with a target reserve of $0.8 million. On June 23, 2023, the Florida OPC filed a motion for reconsideration of the PSC’s approval of RSAM, which was denied on September 12, 2023. On July 7, 2023, the Florida OPC filed a notice of appeal with the Florida Supreme Court, which is pending. The Florida OPC filed their initial brief on January 31, 2024.

The RSAM is recorded as either an increase or decrease to accrued removal costs which is reflected on the Company’s balance sheets and a corresponding increase or decrease to depreciation and amortization expense. In order to earn the targeted regulatory return on equity ("ROE") in each reporting period subject to the conditions of the effective rate agreement, RSAM is calculated using a trailing thirteen-month average of rate base and capital structure in conjunction with the trailing twelve-month regulatory base net operating income, which primarily includes the base portion of rates and other revenues, net of operations and maintenance expenses, depreciation and amortization, interest and tax expenses. In general, the net impact of these income statement line items is adjusted, in part, by RSAM or its reversal to earn the targeted regulatory ROE. For the three months ended March 31, 2024, the Company recorded decreases to asset removal costs and depreciation expense of $3.4 million as a result of the RSAM adjustment.

Storm Protection Plan: In 2020, the Florida PSC implemented the Storm Protection Plan ("SPP") and Storm Protection Plan Cost Recovery Clause ("SPPCRC") rules, which require electric utilities to petition the Florida PSC for approval of a Transmission and Distribution Storm Protection Plan that covers the utility’s immediate 10-year planning period with updates to the plan at least every 3 years. The SPPCRC rules allow the utility to file for recovery of associated costs for the SPP. Our Florida electric distribution operation’s SPP plan was filed during the first quarter of 2022 and approved in the fourth quarter of 2022 with modifications, by the Florida PSC. Rates associated with this initiative were effective in January 2023. The Commission voted to approve the projections in November 2023. FPU projects to spend $13.6 million on the program in 2024.


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GUARD Program: In February 2023, FPU filed a petition with the Florida PSC for approval of the GUARD program. GUARD is a ten-year program to enhance the safety, reliability, and accessibility of portions of our natural gas distribution system. We identified various categories of projects to be included in GUARD, which include the relocation of mains and service lines located in rear easements and other difficult to access areas to the front of the street, the replacement of problematic distribution mains, service lines, and maintenance and repair equipment and system reliability projects. In August 2023, the Florida PSC approved the GUARD program, which included $205.0 million of capital expenditures projected to be spent over a 10-year period.

SAFE Program: In June 2023, the Florida PSC issued the approval order for the continuation of the SAFE program beyond its 2025 expiration date and inclusion of 150 miles of additional mains and services located in rear property easements. The SAFE program is designed to relocate certain mains and facilities associated with rear lot easements to street front locations to improve FCG's ability to inspect and maintain the facilities and reduce opportunities for damage and theft. In the same order, the Commission approved a replacement of 160 miles of pipe that was used in the 1970s and 1980s and shown through industry research to exhibit premature failure in the form of cracking. The program includes projected capital expenditures of $205.0 million over a 10-year period.

In April 2024, FCG filed a petition with the Florida PSC to more closely align the SAFE Program with FPU's GUARD program. Specifically, the requested modifications will enable FCG to accelerate remediation related to problematic pipe and facilities consisting of obsolete and exposed pipe. If approved, these efforts will serve to improve the safety and reliability of service to FCG's customers. These modifications, if approved, result in an estimated additional $50.0 million in capital expenditures associated with the SAFE Program which would increase the total projected capital expenditures to $255.0 million over a 10-year period.

Newberry Expansion: In April 2023, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreement with FPU for an additional 8,000 Dts/d of firm service in the Newberry, Florida area. The petition was approved by the Florida PSC in the third quarter of 2023. Peninsula Pipeline will construct a pipeline extension, which will be used by FPU to support the development of a natural gas distribution system to provide gas service to the City of Newberry. A filing to address the acquisition and conversion of existing Company owned propane community gas systems in Newberry was made in November 2023. The Florida PSC approved it in April 2024. The Company anticipates beginning the conversions of the community gas systems in the second quarter of 2024.

East Coast Reinforcement Projects: In December 2023, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities on the East Coast of Florida. The projects are driven by the need for increased supply to coastal portions of the state that are experiencing significant population growth. Peninsula Pipeline will construct several pipeline extensions which will support FPU’s distribution system in the areas of Boynton Beach and New Smyrna Beach with an additional 15,000 Dts/d and 3,400 Dts/d, respectively. The Florida PSC approved the projects in March 2024.

Central Florida Reinforcement Projects: In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for its Transportation Service Agreements with FPU for projects that will support additional supply to communities located in Central Florida. The projects are driven by the need for increased supply to communities in central Florida that are experiencing significant population growth. Peninsula Pipeline will construct several pipeline extensions which will support FPU's distribution system around Plant City and Lake Mattie with an additional 5,000 Dts/d and 8,700 Dts/d, respectively. The Florida PSC approved the projects in May 2024.

Alternative Natural Gas Projects: In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for its approval of its Transportation Service Agreements with FCG for projects that will support the transportation of additional supply into FCG’s distribution system. The projects are driven by continued growth in the regions and will facilitate additional transportation capacity, including the transportation of pipeline quality gas produced from landfills through FCG's system. Peninsula Pipeline will construct several pipeline extensions which will support FCG's distribution system in Brevard County, Indian-River County, and Miami-Dade County.

St. Cloud Project Amendment: In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for its approval of an amendment to its Transportation Service Agreement with FPU for a project that will support additional supply to communities in St. Cloud Florida. The project is driven by the need to expand gas service to future communities that are expected in that area. Peninsula Pipeline will construct pipeline expansions that will allow FPU to serve the expected new growth. The expansion will provide FPU with an additional 10,000 Dts/d. The Florida PSC approved the projects in May 2024.

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Pioneer Supply Header Pipeline Project: In March 2024, Peninsula Pipeline filed a petition with the Florida PSC for its approval of Firm Transportation Service Agreements with both FCG and FPU for a project that will support greater supply growth of natural gas service in southeast Florida. The project consists of the transfer of a pipeline asset from FCG to Peninsula Pipeline. Peninsula Pipeline will proceed to provide transportation service to both FCG and FPU using the pipeline asset, which provides opportunities for additional project development.

Eastern Shore

Worcester Resiliency Upgrade: In August 2023, Eastern Shore filed an application with the FERC requesting authorization to construct the Worcester Resiliency Upgrade, which consists of a mixture of storage and transmission facilities in Sussex County, DE and Wicomico, Worcester, and Somerset Counties in Maryland. The project will provide long-term incremental supply necessary to support the growing demand of the participating shippers. Eastern Shore has requested certificate authorization by December 2024, with a target in-service date by the third quarter of 2025. In December 2023, FERC issued its schedule for preparation of the Environmental Assessment. In April 2024, the FERC issued their environmental assessment with no significant impacts noted.

TCJA

In connection with the TCJA, which was signed into law in December 2017, our customer rates for our regulated businesses were adjusted as applicable as approved by the regulators. Regulatory liabilities related to accumulated deferred income taxes (“ADIT”) associated with the TCJA amounted to $85.5 million and $85.8 million at March 31, 2024 and December 31, 2023, respectively. With the exception of the ADIT balance of $34.2 million attributable to Eastern Shore, such amounts are being amortized in accordance with approvals received from the Delaware, Maryland, and Florida PSCs in 2018 and 2019. The ADIT balance attributable to Eastern Shore will be addressed in its next rate case filing.


6. Environmental Commitments and Contingencies

We are subject to federal, state and local laws and regulations governing environmental quality and pollution control. These laws and regulations require us to remove or remediate, at current and former operating sites, the effect on the environment of the disposal or release of specified substances.
MGP Sites
We have participated in the investigation, assessment or remediation of, and have exposures at, seven former MGP sites. We have received approval for recovery of clean-up costs in rates for sites located in Salisbury, Maryland; Seaford, Delaware; and Winter Haven, Key West, Pensacola, Sanford and West Palm Beach, Florida.
As of March 31, 2024 and December 31, 2023, we had approximately $3.5 million and $3.6 million, respectively, in environmental liabilities related to the former MGP sites, and related regulatory assets of approximately $0.5 million at the respective balance sheet dates for future recovery of environmental costs from customers.
Environmental liabilities for our MGP sites are recorded on an undiscounted basis based on the estimate of future costs provided by independent consultants. We continue to expect that all costs related to environmental remediation and related activities, including any potential future remediation costs for which we do not currently have approval for regulatory recovery, will be recoverable from customers through rates.
Remediation is ongoing for the MGPs in Winter Haven and Key West in Florida and in Seaford, Delaware. The remaining clean-up costs are estimated to range from $0.3 million to $0.8 million for these three sites. The Environmental Protection Agency has approved a "site-wide ready for anticipated use" status for the Sanford, Florida MGP site, which is the final step before delisting a site. The remaining remediation expenses for the Sanford MGP site are immaterial.
The remedial actions approved by the Florida Department of Environmental Protection have been implemented on the east parcel of our West Palm Beach Florida site. Similar remedial actions have been initiated on the site's west parcel, and construction of active remedial systems are expected to be completed in 2024. Remaining remedial costs for West Palm Beach, including completion of the construction of the system on the West Parcel, are estimated to take between five and fifteen years of operation, maintenance and monitoring, and final site work for closeout of the property is estimated to be between $3.3 million and $5.7 million.

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7.     Other Commitments and Contingencies
Natural Gas, Electric and Propane Supply
In March 2023, our Delmarva Peninsula natural gas distribution operations entered into asset management agreements with a third party to manage their natural gas transportation and storage capacity. The agreements were effective as of April 1, 2023 and expire in March 2026.
FPU natural gas distribution operations and Eight Flags have separate asset management agreements with Emera Energy Services, Inc. to manage their natural gas transportation capacity. These agreements commenced in November 2020 and expire in October 2030.
Florida Natural Gas has firm transportation service contracts with FGT and Gulfstream. Pursuant to a capacity release program approved by the Florida PSC, all of the capacity under these agreements has been released to various third parties. Under the terms of these capacity release agreements, Chesapeake Utilities is contingently liable to FGT and Gulfstream should any party, that acquired the capacity through release, fail to pay the capacity charge. To date, Chesapeake Utilities has not been required to make a payment resulting from this contingency.
FPU’s electric supply contracts require FPU to maintain an acceptable standard of creditworthiness based on specific financial ratios. FPU’s agreement with Florida Power & Light Company requires FPU to meet or exceed a debt service coverage ratio of 1.25 times based on the results of the prior 12 months. If FPU fails to meet this ratio, it must provide an irrevocable letter of credit or pay all amounts outstanding under the agreement within five business days. FPU’s electric supply agreement with Gulf Power requires FPU to meet the following ratios based on the average of the prior six quarters: (a) funds from operations interest coverage ratio (minimum of two times), and (b) total debt to total capital (maximum of 65 percent). If FPU fails to meet the requirements, it has to provide the supplier a written explanation of actions taken, or proposed to be taken, to become compliant. Failure to comply with the ratios specified in the Gulf Power agreement could also result in FPU having to provide an irrevocable letter of credit. As of March 31, 2024, FPU was in compliance with all of the requirements of its fuel supply contracts.
Eight Flags provides electricity and steam generation services through its CHP plant located on Amelia Island, Florida. In June 2016, Eight Flags began selling power generated from the CHP plant to FPU pursuant to a 20-year power purchase agreement for distribution to our electric customers. In July 2016, Eight Flags also started selling steam, pursuant to a separate 20-year contract, to the landowner on which the CHP plant is located. The CHP plant is powered by natural gas transported by FPU through its distribution system and Peninsula Pipeline through its intrastate pipeline.

Corporate Guarantees
The Board of Directors has authorized us to issue corporate guarantees securing obligations of our subsidiaries and to obtain letters of credit securing our subsidiaries' obligations. The maximum authorized liability under such guarantees and letters of credit as of March 31, 2024 was $35.0 million. The aggregate amount guaranteed related to our subsidiaries at March 31, 2024 was approximately $24.4 million with the guarantees expiring on various dates through March 2025. In addition, the Board has authorized us to issue specific purpose corporate guarantees. The amount of specific purpose guarantees outstanding at March 31, 2024 was $4.0 million.
As of March 31, 2024, we have issued letters of credit totaling approximately $7.0 million related to the electric transmission services for FPU's electric division, the firm transportation service agreement between TETLP and our Delaware and Maryland divisions, the capacity agreement between NEXUS and Aspire, the storage agreement between Bay Gas Storage Company and FCG as well as our primary insurance carriers. These letters of credit have various expiration dates through February 2025 and to date, none have been used. We do not anticipate that the counterparties will draw upon these letters of credit, and we expect that they will be renewed to the extent necessary in the future.

8.    Segment Information
We use the management approach to identify operating segments. We organize our business around differences in regulatory environment and/or products or services, and the operating results of each segment are regularly reviewed by the chief operating decision maker, our President and Chief Executive Officer, in order to make decisions about resources and to assess performance.

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Our operations are entirely domestic and are comprised of two reportable segments:
Regulated Energy. Includes energy distribution and transmission services (natural gas distribution, natural gas transmission and electric distribution operations). All operations in this segment are regulated, as to their rates and services, by the PSC having jurisdiction in each operating territory or by the FERC in the case of Eastern Shore.
Unregulated Energy. Includes energy transmission, energy generation (the operations of our Eight Flags' CHP plant), propane distribution operations, mobile compressed natural gas distribution and pipeline solutions operations, and sustainable energy investments including renewable natural gas. Also included in this segment are other unregulated energy services, such as energy-related merchandise sales and heating, ventilation and air conditioning, plumbing and electrical services. These operations are unregulated as to their rates and services.

The remainder of our operations are presented as “Other businesses and eliminations,” which consists of unregulated subsidiaries that own real estate leased to Chesapeake Utilities, as well as certain corporate costs not allocated to other operations.

The following table presents financial information about our reportable segments:

Three Months Ended
March 31,
20242023
(in thousands)
Operating Revenues, Unaffiliated Customers
Regulated Energy$167,927 $141,621 
Unregulated Energy77,817 76,508 
Total operating revenues, unaffiliated customers$245,744 $218,129 
Intersegment Revenues (1)
Regulated Energy$499 $649 
Unregulated Energy5,286 6,657 
Other businesses45 45 
Total intersegment revenues$5,830 $7,351 
Operating Income
Regulated Energy$58,109 $37,625 
Unregulated Energy21,429 17,245 
Other businesses and eliminations47 45 
Operating income79,585 54,915 
Other income, net195 276 
Interest charges17,026 7,232 
Income Before Income Taxes62,754 47,959 
Income taxes16,586 11,615 
Net Income$46,168 $36,344 
(1) All significant intersegment revenues are billed at market rates and have been eliminated from consolidated operating revenues.

(in thousands)March 31, 2024December 31, 2023
Identifiable Assets
Regulated Energy segment$2,830,632 $2,781,581 
Unregulated Energy segment 459,825 477,402 
Other businesses and eliminations41,427 45,721 
Total Identifiable Assets $3,331,884 $3,304,704 

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9.    Stockholders' Equity
Common Stock Issuances
In November 2023, in connection with our acquisition of FCG, we completed an equity offering resulting in the issuance of approximately 4.4 million shares of our common stock at a price per share of $82.72 (net of underwriter discounts and commissions). We received net proceeds of $366.4 million which were used to partially finance the acquisition.

We maintain an effective shelf registration statement with the SEC for the issuance of shares under our DRIP and other plans. Depending on our capital needs and subject to market conditions, in addition to other possible debt and equity offerings, we may issue additional shares under the direct stock purchase component of the DRIP. For the three months ended March 31, 2024, we received net proceeds of $0.1 million under the DRIP. There were no issuances under DRIP during 2023. Our most recent ATM equity program, which allowed us to issue and sell shares of our common stock up to an aggregate offering price of $75.0 million, expired in June 2023.

Accumulated Other Comprehensive Loss

Defined benefit pension and postretirement plan items, unrealized gains (losses) of our propane swap agreements designated as commodity contract cash flow hedges, and the unrealized gains (losses) of our interest rate swap agreements designated as cash flow hedges are the components of our accumulated other comprehensive loss. The following tables present the changes in the balances of accumulated other comprehensive loss components as of March 31, 2024 and 2023. All amounts in the following tables are presented net of tax.

Defined BenefitCommodityInterest Rate
Pension andContractSwap
PostretirementCash FlowCash Flow
Plan ItemsHedgesHedgesTotal
(in thousands)
As of December 31, 2023$(2,584)$(274)$120 $(2,738)
Other comprehensive income before reclassifications 1,441 417 1,858 
Amounts reclassified from accumulated other comprehensive income (loss)13 (791)(128)(906)
Net current-period other comprehensive income (loss)13 650 289 952 
As of March 31, 2024$(2,571)$376 $409 $(1,786)
As of December 31, 2022$(2,506)$1,092 $35 $(1,379)
Other comprehensive income (loss) before reclassifications— 22 (148)(126)
Amounts reclassified from accumulated other comprehensive income (loss)10 (440)(48)(478)
Net prior-period other comprehensive income (loss)10 (418)(196)(604)
As of March 31, 2023$(2,496)$674 $(161)$(1,983)
Deferred gains or losses for our commodity contract and interest rate swap cash flow hedges are recognized in earnings upon settlement and are included in the effects of gains and losses from derivative instruments. See Note 12, Derivative Instruments, for additional details. Amortization of the net loss related to the defined benefit pension plan and postretirement plans is included in the computation of net periodic cost (benefit). See Note 10, Employee Benefit Plans, for additional details.


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10.    Employee Benefit Plans
Net periodic (benefit) cost for the FPU Pension Plan for the three months ended March 31, 2024 and 2023 is set forth in the following table:
Three Months Ended
March 31,
20242023
(in thousands)  
Interest cost$599 $633 
Expected return on plan assets(724)(668)
Amortization of net loss69 110 
Total periodic (benefit) cost$(56)$75 

Amounts reclassified from accumulated other comprehensive income (loss) and regulatory assets were not material during the three months ended March 31, 2024 and 2023.
Net periodic benefit costs for our other pension and postretirement benefit plans were not material for the three months ended March 31, 2024 and 2023.

The components of our net periodic costs have been recorded or reclassified to other expense, net in the condensed consolidated statements of income. Pursuant to their respective regulatory orders, FPU and Chesapeake Utilities continue to record, as a regulatory asset, a portion of their unrecognized postretirement benefit costs related to their regulated oper