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FORM 10-K
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C
HESAPEAKE
U
TILITIES
C
ORPORATION
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(Exact name of registrant as specified in its charter)
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State of Delaware
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51-0064146
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock—par value per share $0.4867
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New York Stock Exchange, Inc.
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company"
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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•
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state and federal legislative and regulatory initiatives (including deregulation) that affect cost and investment recovery, have an impact on rate structures, and affect the speed and the degree to which competition enters the electric and natural gas industries;
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the outcomes of regulatory, tax, environmental and legal matters, including whether pending matters are resolved within current estimates and whether the costs associated with such matters are adequately covered by insurance or recoverable in rates;
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the impact of significant changes to current tax regulations and rates;
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the timing of certification authorizations associated with new capital projects;
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the ability to construct facilities at or below estimated costs;
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changes in environmental and other laws and regulations to which we are subject and environmental conditions of property that we now, or may in the future, own or operate;
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possible increased federal, state and local regulation of the safety of our operations;
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general economic conditions, including any potential effects arising from terrorist attacks and any hostilities or other external factors over which we have no control;
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long-term global climate change, which could adversely affect customer demand or cause extreme weather conditions that disrupt the Company's operations;
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the weather and other natural phenomena, including the economic, operational and other effects of hurricanes, ice storms and other damaging weather events;
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customers' preferred energy sources;
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industrial, commercial and residential growth or contraction in our markets or service territories;
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the effect of competition on our businesses;
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the timing and extent of changes in commodity prices and interest rates;
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the ability to establish new, and maintain key, supply sources;
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the effect of spot, forward and future market prices on our various energy businesses;
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the extent of our success in connecting natural gas and electric supplies to transmission systems and in expanding natural gas and electric markets;
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the creditworthiness of counterparties with which we are engaged in transactions;
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the capital-intensive nature of our regulated energy businesses;
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the results of financing efforts, including our ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings and general economic conditions;
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the ability to successfully execute, manage and integrate merger, acquisition or divestiture plans; regulatory or other limitations imposed as a result of a merger; acquisition or divestiture, and the success of the business following a merger, acquisition or divestiture;
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the impact on our costs and funding obligations, under our pension and other post-retirement benefit plans, of potential downturns in the financial markets, lower discount rates, and costs associated with the Patient Protection and Affordable Care Act;
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the ability to continue to hire, train and retain appropriately qualified personnel;
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the effect of accounting pronouncements issued periodically by accounting standard-setting bodies;
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the timing and success of technological improvements; and
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risks related to cyber-attacks or cyber-terrorism that could disrupt our business operations or result in failure of information technology systems.
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(dollars in thousands)
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Operating Income
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Total Assets
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||||
Regulated Energy
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$
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73,160
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$
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1,121,673
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Unregulated Energy
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12,477
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261,541
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Other businesses and eliminations
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206
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34,220
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Total
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$
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85,843
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$
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1,417,434
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|||||||||||||||
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Delmarva
Natural Gas Distribution
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Florida
Natural Gas Distribution
(2)
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FPU
Electric
Distribution
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||||||||||||
Operating Revenues
(in thousands)
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|||||||||
Residential
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$
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57,365
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57
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%
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$
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38,703
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38
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%
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$
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44,082
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53
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%
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Commercial
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31,585
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32
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%
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36,039
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36
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%
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41,141
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50
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%
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Industrial
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7,619
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8
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%
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28,182
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28
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%
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3,561
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4
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%
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Other
(1)
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3,504
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3
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%
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(1,495
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)
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(2
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)%
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(5,918
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)
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(7
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)%
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Total Operating revenues
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$
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100,073
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100
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%
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$
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101,429
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100
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%
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$
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82,866
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100
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%
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Volumes
(in Dts for natural gas/MWHs for electric)
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Residential
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3,368,603
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28
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%
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1,690,983
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6
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%
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291,510
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46
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%
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Commercial
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3,274,975
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28
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%
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7,019,970
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26
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%
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304,235
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48
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%
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Industrial
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5,125,633
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43
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%
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16,105,084
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60
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%
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27,380
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4
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%
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Other
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95,415
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1
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%
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1,875,761
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8
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%
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7,511
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2
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%
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Total Volumes
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11,864,626
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100
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%
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26,691,798
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100
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%
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630,636
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100
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%
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Average Number of Customers
(4)
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Residential
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68,699
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91
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%
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70,206
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90
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%
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24,574
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77
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%
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Commercial
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6,845
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9
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%
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5,475
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7
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%
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7,450
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23
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%
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Industrial
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147
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—
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%
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2,157
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3
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%
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2
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—
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%
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Other
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5
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—
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%
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3
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—
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%
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—
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—
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%
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Total Average Customers
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75,696
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100
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%
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77,841
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100
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%
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32,026
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100
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%
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Eastern Shore
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Operating Revenues
(in thousands)
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Local distribution companies - affiliated
(1)
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$
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18,350
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32
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%
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Local distribution companies - non-affiliated
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22,782
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39
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%
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Commercial and industrial
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20,485
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35
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%
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Other
(2)
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(3,847
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)
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(6
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)%
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Total Operating Revenues
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$
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57,770
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100
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%
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|||
Contracted firm transportation capacity
(in Dts/d)
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Local distribution companies - affiliated
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100,652
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43
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%
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Local distribution companies - non-affiliated
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66,182
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28
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%
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Commercial and industrial
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67,923
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29
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%
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Total
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234,757
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100
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%
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Design day capacity
(in Dts/d)
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234,757
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100
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%
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Maximum Daily Firm Transportation Capacity (Dts)
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Contract Expiration Date
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Division
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Counterparty
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Delaware
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Eastern Shore
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72,029
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2018 - 2028
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Columbia Gas
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10,960
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2019 - 2020
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Transco
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21,423
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2018 - 2028
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TETLP
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34,100
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2027
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Maryland
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Eastern Shore
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26,673
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2018 - 2027
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Columbia Gas
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4,200
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2018 - 2019
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Transco
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6,128
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2018
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TETLP
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15,900
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2027
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|
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Maximum Daily Firm Transportation Capacity (Dts)
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Contract Expiration Date
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Division
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Counterparty
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|
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Florida Division
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Gulfstream
(1)
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10,000
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2022
|
|
|
|
|
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FPU
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FGT
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41,909 - 73,317
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2020 - 2041
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Peninsula Pipeline
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25,000 - 32,000
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2033 - 2038
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Peoples Gas System
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2,660
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2024 - 2035
|
|
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Florida City Gas
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|
300
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|
2032
|
|
|
Delmarva Peninsula and Pennsylvania
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Florida
|
||||||||||
Operating Revenues
(in thousands)
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|
|
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|
||||||||||
Residential bulk
|
|
$
|
21,051
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|
|
28
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%
|
|
$
|
6,123
|
|
|
28
|
%
|
Residential metered
|
|
7,904
|
|
|
11
|
%
|
|
4,735
|
|
|
22
|
%
|
||
Commercial bulk
|
|
13,655
|
|
|
18
|
%
|
|
5,104
|
|
|
23
|
%
|
||
Commercial metered
|
|
—
|
|
|
—
|
%
|
|
2,119
|
|
|
10
|
%
|
||
Wholesale
|
|
24,667
|
|
|
33
|
%
|
|
920
|
|
|
4
|
%
|
||
AutoGas
|
|
2,318
|
|
|
3
|
%
|
|
—
|
|
|
—
|
%
|
||
Other
(1)
|
|
5,033
|
|
|
7
|
%
|
|
2,946
|
|
|
13
|
%
|
||
Total Operating Revenues
|
|
$
|
74,628
|
|
|
100
|
%
|
|
$
|
21,947
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
||||||
Volumes
(in thousands of gallons)
|
|
|
|
|
|
|
|
|
||||||
Residential bulk
|
|
8,718
|
|
|
17
|
%
|
|
1,433
|
|
|
23
|
%
|
||
Residential metered
|
|
3,352
|
|
|
6
|
%
|
|
893
|
|
|
14
|
%
|
||
Commercial bulk
|
|
9,032
|
|
|
18
|
%
|
|
2,371
|
|
|
37
|
%
|
||
Commercial metered
|
|
—
|
|
|
—
|
%
|
|
827
|
|
|
13
|
%
|
||
Wholesale
|
|
24,463
|
|
|
48
|
%
|
|
812
|
|
|
13
|
%
|
||
AutoGas
|
|
2,159
|
|
|
4
|
%
|
|
—
|
|
|
—
|
%
|
||
Other
|
|
3,500
|
|
|
7
|
%
|
|
—
|
|
|
—
|
%
|
||
Total Volumes
|
|
51,224
|
|
|
100
|
%
|
|
6,336
|
|
|
100
|
%
|
||
|
|
|
|
|
|
|
|
|
||||||
Average Number of Customers
(2)
|
|
|
|
|
|
|
|
|
||||||
Residential bulk
|
|
25,452
|
|
|
66
|
%
|
|
9,059
|
|
|
55
|
%
|
||
Residential metered
|
|
8,669
|
|
|
23
|
%
|
|
6,089
|
|
|
37
|
%
|
||
Commercial bulk
|
|
4,166
|
|
|
11
|
%
|
|
930
|
|
|
6
|
%
|
||
Commercial metered
|
|
—
|
|
|
—
|
%
|
|
278
|
|
|
2
|
%
|
||
Wholesale
|
|
35
|
|
|
—
|
%
|
|
8
|
|
|
—
|
%
|
||
AutoGas
|
|
74
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
||
Total Average Customers
|
|
38,396
|
|
|
100
|
%
|
|
16,364
|
|
|
100
|
%
|
|
|
Operating Revenues
(in thousands)
|
|
% of Total
|
|||
Southeast
|
|
$
|
59,269
|
|
|
32
|
%
|
Mid-Atlantic
|
|
87,241
|
|
|
47
|
%
|
|
Appalachian Basin
|
|
38,009
|
|
|
21
|
%
|
|
|
|
$
|
184,519
|
|
|
100
|
%
|
|
Operating revenues
|
|
Deliveries
|
|||
|
(in thousands)
|
|
(in Dts)
|
|||
Supply to Columbia Gas of Ohio
|
$
|
11,827
|
|
|
2,264
|
|
Supply to CGC
|
10,507
|
|
|
1,345
|
|
|
Supply to Marketers - affiliated
|
4,027
|
|
|
1,425
|
|
|
Supply to Marketers - unaffiliated
|
4,633
|
|
|
1,725
|
|
|
Other (including natural gas gathering and processing)
|
2,330
|
|
|
1,548
|
|
|
Total
|
$
|
33,324
|
|
|
8,307
|
|
Name
|
|
Age
|
|
Position
|
Michael P. McMasters
|
|
59
|
|
President (March 2010 - present)
Chief Executive Officer (January 2011 - present)
Director (March 2010 - present)
Executive Vice President (September 2008 - February 2010)
Chief Operating Officer (September 2008 - December 2010)
Chief Financial Officer (January 1997 - September 2008)
Mr. McMasters also previously served as Senior Vice President, Vice President, Treasurer, Director of Accounting and Rates and Controller.
|
Beth W. Cooper
|
|
51
|
|
Senior Vice President (September 2008 - present)
Chief Financial Officer (September 2008 - present)
Assistant Secretary (March 2015-present) Corporate Secretary (June 2005 - March 2015)
Vice President (June 2005 - September 2008)
Treasurer (March 2003 - May 2012)
Ms. Cooper also previously served as Assistant Vice President, Assistant Treasurer, Director of Internal Audit and Director of Strategic Planning.
|
Elaine B. Bittner
|
|
48
|
|
Senior Vice President of Strategic Development (May 2013 - present)
Chief Operating Officer - Sharp, Aspire Energy and PESCO (May 2014 - Present)
Vice President of Strategic Development (June 2010 - May 2013)
Vice President, Eastern Shore (May 2005 - June 2010) Ms. Bittner also previously served as Director of Eastern Shore, Director of Customer Services and Regulatory Affairs for Eastern Shore and Director of Environmental Affairs and Environmental Engineer. |
Stephen C. Thompson
|
|
57
|
|
Senior Vice President (September 2004 - present)
President, Eastern Shore (January 1997 - present) President and Chief Operating Officer, Sandpiper (May 2014 - present)
Vice President (May 1997 - September 2004)
Mr. Thompson also previously served as Director of Gas Supply and Marketing for Eastern Shore, Superintendent of Eastern Shore and Regional Manager for Florida distribution operations.
|
Jeffry M. Householder
|
|
60
|
|
President of Florida Public Utilities Company (June 2010 - present)
Prior to joining Chesapeake Utilities, Mr. Householder operated a consulting practice that provided business development and regulatory services to utilities, propane retailers and industrial clients.
|
James F. Moriarty
|
|
60
|
|
Senior Vice President (February 2017 - present) General Counsel & Corporate Secretary (March 2015 - present)
Vice President (March 2015 - February 2017)
Prior to joining Chesapeake Utilities, Mr. Moriarty was a Partner at Locke Lord LLP and Fulbright & Jaworski, LLP, both international law firms with offices in Washington, D.C.
|
•
|
Charters for the Audit Committee, Compensation Committee, Investment Committee, and Corporate Governance Committee of the Board of Directors; and
|
|
Quarter Ended
|
|
High
|
|
Low
|
|
Close
|
|
Dividends
Declared
Per Share
|
||||||||
2017
|
|
|
|
|
|
|
|
|
|
||||||||
|
March 31
|
|
$
|
70.70
|
|
|
$
|
63.00
|
|
|
$
|
69.20
|
|
|
$
|
0.3050
|
|
|
June 30
|
|
$
|
77.75
|
|
|
$
|
68.65
|
|
|
$
|
74.95
|
|
|
$
|
0.3250
|
|
|
September 30
|
|
$
|
81.95
|
|
|
$
|
74.80
|
|
|
$
|
78.25
|
|
|
$
|
0.3250
|
|
|
December 31
|
|
$
|
86.35
|
|
|
$
|
75.00
|
|
|
$
|
78.55
|
|
|
$
|
0.3250
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2016
|
|
|
|
|
|
|
|
|
|
||||||||
|
March 31
|
|
$
|
67.36
|
|
|
$
|
52.25
|
|
|
$
|
62.97
|
|
|
$
|
0.2875
|
|
|
June 30
|
|
$
|
66.19
|
|
|
$
|
56.56
|
|
|
$
|
66.18
|
|
|
$
|
0.3050
|
|
|
September 30
|
|
$
|
67.88
|
|
|
$
|
59.12
|
|
|
$
|
61.06
|
|
|
$
|
0.3050
|
|
|
December 31
|
|
$
|
70.00
|
|
|
$
|
57.63
|
|
|
$
|
66.95
|
|
|
$
|
0.3050
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Number
of Shares
Purchased
|
|
Average
Price Paid
per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced Plans
or Programs
(2)
|
|
Maximum Number of
Shares That May Yet Be
Purchased Under the Plans
or Programs
(2)
|
|||||
Period
|
|
|
|
|
|
|
|
|||||
October 1, 2017 through October 31, 2017
(1)
|
373
|
|
|
$
|
78.90
|
|
|
—
|
|
|
—
|
|
November 1, 2017 through November 30, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
December 1, 2017 through December 31, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
373
|
|
|
$
|
78.90
|
|
|
—
|
|
|
—
|
|
(1)
|
In October 2017, we purchased shares of common stock on the open market for the purpose of reinvesting the dividend on shares held in the Rabbi Trust accounts for certain Directors and Senior Executives under the Non-Qualified Deferred Compensation Plan. The Non-Qualified Deferred Compensation Plan is discussed in detail in
Item 8, Financial Statements and Supplementary Data
(see Note 16
, Employee Benefit Plans
, in the consolidated financial statements). During the quarter, 373 shares were purchased through the reinvestment of dividends.
|
(2)
|
Except for the purpose described in footnote
(1)
, we have no publicly announced plans or programs to repurchase our shares.
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
||||||||||||
Chesapeake Utilities
|
$
|
100
|
|
|
$
|
136
|
|
|
$
|
172
|
|
|
$
|
200
|
|
|
$
|
241
|
|
|
$
|
287
|
|
Industry Index
|
$
|
100
|
|
|
$
|
115
|
|
|
$
|
153
|
|
|
$
|
172
|
|
|
$
|
202
|
|
|
$
|
242
|
|
S&P 500 Index
|
$
|
100
|
|
|
$
|
132
|
|
|
$
|
150
|
|
|
$
|
152
|
|
|
$
|
170
|
|
|
$
|
206
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Operating
|
|
|
|
|
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
||||||
Regulated Energy
|
$
|
326,310
|
|
|
$
|
305,689
|
|
|
$
|
301,902
|
|
Unregulated Energy
|
324,595
|
|
|
203,778
|
|
|
162,108
|
|
|||
Other businesses and eliminations
|
(33,322
|
)
|
|
(10,607
|
)
|
|
(4,766
|
)
|
|||
Total revenues
|
$
|
617,583
|
|
|
$
|
498,860
|
|
|
$
|
459,244
|
|
Operating income
|
|
|
|
|
|
||||||
Regulated Energy
|
$
|
73,160
|
|
|
$
|
69,851
|
|
|
$
|
60,985
|
|
Unregulated Energy
|
12,477
|
|
|
13,844
|
|
|
16,355
|
|
|||
Other businesses and eliminations
|
206
|
|
|
401
|
|
|
418
|
|
|||
Total operating income
|
$
|
85,843
|
|
|
$
|
84,096
|
|
|
$
|
77,758
|
|
Net income from continuing operations
|
$
|
58,124
|
|
|
$
|
44,675
|
|
|
$
|
41,140
|
|
Assets
|
|
|
|
|
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Gross property, plant and equipment
|
$
|
1,312,117
|
|
|
$
|
1,175,595
|
|
|
$
|
1,007,489
|
|
Net property, plant and equipment
|
$
|
1,126,027
|
|
|
$
|
986,664
|
|
|
$
|
854,950
|
|
Total assets
|
$
|
1,417,434
|
|
|
$
|
1,229,219
|
|
|
$
|
1,067,421
|
|
Capital expenditures
|
$
|
191,103
|
|
|
$
|
169,376
|
|
|
$
|
195,261
|
|
Capitalization
|
|
|
|
|
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Stockholders’ equity
|
$
|
486,294
|
|
|
$
|
446,086
|
|
|
$
|
358,138
|
|
Long-term debt, net of current maturities
|
197,395
|
|
|
136,954
|
|
|
149,006
|
|
|||
Total capitalization
|
$
|
683,689
|
|
|
$
|
583,040
|
|
|
$
|
507,144
|
|
Current portion of long-term debt
|
9,421
|
|
|
12,099
|
|
|
9,151
|
|
|||
Short-term debt
|
250,969
|
|
|
209,871
|
|
|
173,397
|
|
|||
Total capitalization and short-term financing
|
$
|
944,079
|
|
|
$
|
805,010
|
|
|
$
|
689,692
|
|
(1)
|
These amounts include the financial position and results of operation of FPU for the period from the merger closing (October 28, 2009) to December 31, 2009. These amounts also include the effects of acquisition accounting and issuance of our common shares as a result of the merger.
|
For the Year Ended December 31,
|
|
|
|
|
|
|
|
|
||||||||||||||||||
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
(1)
|
|
2008
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
$
|
300,442
|
|
|
$
|
264,637
|
|
|
$
|
246,208
|
|
|
$
|
256,226
|
|
|
$
|
269,438
|
|
|
$
|
138,671
|
|
|
$
|
116,123
|
|
184,961
|
|
|
166,723
|
|
|
133,049
|
|
|
149,586
|
|
|
146,793
|
|
|
119,973
|
|
|
161,290
|
|
|||||||
13,431
|
|
|
12,946
|
|
|
13,245
|
|
|
12,215
|
|
|
11,315
|
|
|
10,141
|
|
|
14,030
|
|
|||||||
$
|
498,834
|
|
|
$
|
444,306
|
|
|
$
|
392,502
|
|
|
$
|
418,027
|
|
|
$
|
427,546
|
|
|
$
|
268,785
|
|
|
$
|
291,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
$
|
50,451
|
|
|
$
|
50,084
|
|
|
$
|
46,999
|
|
|
$
|
43,911
|
|
|
$
|
43,267
|
|
|
$
|
26,668
|
|
|
$
|
23,833
|
|
11,723
|
|
|
12,353
|
|
|
8,355
|
|
|
9,619
|
|
|
8,150
|
|
|
8,390
|
|
|
3,600
|
|
|||||||
105
|
|
|
297
|
|
|
1,281
|
|
|
175
|
|
|
513
|
|
|
(1,322
|
)
|
|
1,046
|
|
|||||||
$
|
62,279
|
|
|
$
|
62,734
|
|
|
$
|
56,635
|
|
|
$
|
53,705
|
|
|
$
|
51,930
|
|
|
$
|
33,736
|
|
|
$
|
28,479
|
|
$
|
36,092
|
|
|
$
|
32,787
|
|
|
$
|
28,863
|
|
|
$
|
27,622
|
|
|
$
|
26,056
|
|
|
$
|
15,897
|
|
|
$
|
13,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
$
|
870,125
|
|
|
$
|
805,394
|
|
|
$
|
697,159
|
|
|
$
|
625,488
|
|
|
$
|
584,385
|
|
|
$
|
543,905
|
|
|
$
|
381,689
|
|
$
|
689,762
|
|
|
$
|
631,246
|
|
|
$
|
541,781
|
|
|
$
|
487,704
|
|
|
$
|
462,757
|
|
|
$
|
436,587
|
|
|
$
|
280,671
|
|
$
|
904,469
|
|
|
$
|
837,522
|
|
|
$
|
733,746
|
|
|
$
|
709,066
|
|
|
$
|
670,993
|
|
|
$
|
615,811
|
|
|
$
|
385,795
|
|
$
|
98,057
|
|
|
$
|
108,039
|
|
|
$
|
78,210
|
|
|
$
|
44,431
|
|
|
$
|
46,955
|
|
|
$
|
26,294
|
|
|
$
|
30,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
$
|
300,322
|
|
|
$
|
278,773
|
|
|
$
|
256,598
|
|
|
$
|
240,780
|
|
|
$
|
226,239
|
|
|
$
|
209,781
|
|
|
$
|
123,073
|
|
158,486
|
|
|
117,592
|
|
|
101,907
|
|
|
110,285
|
|
|
89,642
|
|
|
98,814
|
|
|
86,422
|
|
|||||||
$
|
458,808
|
|
|
$
|
396,365
|
|
|
$
|
358,505
|
|
|
$
|
351,065
|
|
|
$
|
315,881
|
|
|
$
|
308,595
|
|
|
$
|
209,495
|
|
9,109
|
|
|
11,353
|
|
|
8,196
|
|
|
8,196
|
|
|
9,216
|
|
|
35,299
|
|
|
6,656
|
|
|||||||
88,231
|
|
|
105,666
|
|
|
61,199
|
|
|
34,707
|
|
|
63,958
|
|
|
30,023
|
|
|
33,000
|
|
|||||||
$
|
556,148
|
|
|
$
|
513,384
|
|
|
$
|
427,900
|
|
|
$
|
393,968
|
|
|
$
|
389,055
|
|
|
$
|
373,917
|
|
|
$
|
249,151
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Common Stock Data and Ratios
|
|
|
|
|
|
||||||
Basic earnings per share from continuing operations
|
$
|
3.56
|
|
|
$
|
2.87
|
|
|
$
|
2.73
|
|
Diluted earnings per share from continuing operations
|
$
|
3.55
|
|
|
$
|
2.86
|
|
|
$
|
2.72
|
|
Diluted earnings per share growth - 1 year
|
24.1
|
%
|
|
5.1
|
%
|
|
10.1
|
%
|
|||
Diluted earnings per share growth - 5 year
|
12.3
|
%
|
|
8.4
|
%
|
|
8.4
|
%
|
|||
Diluted earnings per share growth - 10 year
|
10.7
|
%
|
|
9.3
|
%
|
|
8.4
|
%
|
|||
Return on average equity from continuing operations
|
12.6
|
%
|
|
11.3
|
%
|
|
12.1
|
%
|
|||
Common equity / total capitalization
|
71.1
|
%
|
|
76.5
|
%
|
|
70.6
|
%
|
|||
Common equity / total capitalization and short-term financing
|
51.5
|
%
|
|
55.4
|
%
|
|
51.9
|
%
|
|||
Capital expenditures / average total capitalization
|
30.2
|
%
|
|
31.1
|
%
|
|
29.5
|
%
|
|||
Book value per share
(2)
|
$
|
29.75
|
|
|
$
|
27.36
|
|
|
$
|
23.45
|
|
Market price:
|
|
|
|
|
|
||||||
High
|
$
|
86.35
|
|
|
$
|
70.00
|
|
|
$
|
61.13
|
|
Low
|
$
|
63.00
|
|
|
$
|
52.25
|
|
|
$
|
44.37
|
|
Close
|
$
|
78.55
|
|
|
$
|
66.95
|
|
|
$
|
56.75
|
|
Weighted average number of shares outstanding
(2)
|
16,336,789
|
|
|
15,570,539
|
|
|
15,094,423
|
|
|||
Shares outstanding at year-end
(2)
|
16,344,442
|
|
|
16,303,499
|
|
|
15,270,659
|
|
|||
Registered common shareholders
|
2,334
|
|
|
2,373
|
|
|
2,396
|
|
|||
Cash dividends declared per share
(2)
|
$
|
1.28
|
|
|
$
|
1.20
|
|
|
$
|
1.13
|
|
Dividend yield (annualized)
(3)
|
1.7
|
%
|
|
1.8
|
%
|
|
2.0
|
%
|
|||
Book yield
|
4.5
|
%
|
|
4.7
|
%
|
|
5.1
|
%
|
|||
Payout ratio from continuing operations
(4)
|
36.0
|
%
|
|
41.8
|
%
|
|
41.5
|
%
|
|||
Additional Data
|
|
|
|
|
|
||||||
Customers
|
|
|
|
|
|
||||||
Natural gas distribution
|
153,537
|
|
|
149,179
|
|
|
144,872
|
|
|||
Electric distribution
|
32,026
|
|
|
31,695
|
|
|
31,430
|
|
|||
Propane distribution
|
54,760
|
|
|
54,947
|
|
|
53,682
|
|
|||
Total employees
|
945
|
|
|
903
|
|
|
832
|
|
(1)
|
These amounts include the financial position and results of operation of FPU for the period from the merger closing (October 28, 2009) to December 31, 2009.
|
(2)
|
Shares and per share amounts for all periods presented reflect the three-for-two stock split declared on July 2, 2014, effected in the form of a stock dividend, and distributed on September 8, 2014.
|
(3)
|
Dividend yield (annualized) is calculated by multiplying the fourth quarter dividend by four (4), then dividing that amount by the closing common stock price at December 31.
|
(4)
|
The payout ratio from continuing operations is calculated by dividing cash dividends declared per share (for the year) by basic earnings per share from continuing operations.
|
For the Year Ended December 31,
|
|
|
|
|
|
|
|
|
||||||||||||||||||
2014
(2)
|
|
2013
(2)
|
|
2012
(2)
|
|
2011
(2)
|
|
2010
(2)
|
|
2009
(1)(2)
|
|
2008
(2)
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
$
|
2.48
|
|
|
$
|
2.27
|
|
|
$
|
2.01
|
|
|
$
|
1.93
|
|
|
$
|
1.83
|
|
|
$
|
1.45
|
|
|
$
|
1.33
|
|
$
|
2.47
|
|
|
$
|
2.26
|
|
|
$
|
1.99
|
|
|
$
|
1.91
|
|
|
$
|
1.82
|
|
|
$
|
1.43
|
|
|
$
|
1.32
|
|
9.3
|
%
|
|
13.6
|
%
|
|
4.2
|
%
|
|
4.9
|
%
|
|
27.3
|
%
|
|
8.3
|
%
|
|
2.3
|
%
|
|||||||
11.6
|
%
|
|
11.4
|
%
|
|
9.1
|
%
|
|
10.3
|
%
|
|
8.5
|
%
|
|
5.6
|
%
|
|
2.4
|
%
|
|||||||
8.5
|
%
|
|
6.8
|
%
|
|
8.1
|
%
|
|
7.8
|
%
|
|
6.7
|
%
|
|
3.0
|
%
|
|
6.7
|
%
|
|||||||
12.2
|
%
|
|
12.2
|
%
|
|
11.6
|
%
|
|
11.6
|
%
|
|
11.6
|
%
|
|
11.2
|
%
|
|
11.2
|
%
|
|||||||
65.5
|
%
|
|
70.3
|
%
|
|
71.6
|
%
|
|
68.6
|
%
|
|
71.6
|
%
|
|
68.0
|
%
|
|
58.7
|
%
|
|||||||
54.0
|
%
|
|
54.3
|
%
|
|
60.0
|
%
|
|
61.1
|
%
|
|
58.2
|
%
|
|
56.1
|
%
|
|
49.4
|
%
|
|||||||
22.9
|
%
|
|
28.6
|
%
|
|
22.0
|
%
|
|
13.3
|
%
|
|
15.0
|
%
|
|
10.2
|
%
|
|
15.7
|
%
|
|||||||
$
|
20.59
|
|
|
$
|
19.28
|
|
|
$
|
17.82
|
|
|
$
|
16.78
|
|
|
$
|
15.84
|
|
|
$
|
14.89
|
|
|
$
|
12.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
$
|
52.660
|
|
|
$
|
40.780
|
|
|
$
|
32.613
|
|
|
$
|
29.687
|
|
|
$
|
28.133
|
|
|
$
|
23.333
|
|
|
$
|
23.227
|
|
$
|
37.493
|
|
|
$
|
30.560
|
|
|
$
|
26.593
|
|
|
$
|
24.000
|
|
|
$
|
18.673
|
|
|
$
|
14.680
|
|
|
$
|
14.620
|
|
$
|
49.660
|
|
|
$
|
40.013
|
|
|
$
|
30.267
|
|
|
$
|
28.900
|
|
|
$
|
27.680
|
|
|
$
|
21.367
|
|
|
$
|
20.987
|
|
14,551,308
|
|
|
14,430,962
|
|
|
14,379,216
|
|
|
14,333,699
|
|
|
14,211,831
|
|
|
10,969,980
|
|
|
10,217,772
|
|
|||||||
14,588,711
|
|
|
14,457,345
|
|
|
14,396,248
|
|
|
14,350,959
|
|
|
14,286,293
|
|
|
14,091,471
|
|
|
10,240,682
|
|
|||||||
2,329
|
|
|
2,345
|
|
|
2,396
|
|
|
2,481
|
|
|
2,482
|
|
|
2,670
|
|
|
1,914
|
|
|||||||
$
|
1.07
|
|
|
$
|
1.01
|
|
|
$
|
0.96
|
|
|
$
|
0.91
|
|
|
$
|
0.87
|
|
|
$
|
0.83
|
|
|
$
|
0.81
|
|
2.2
|
%
|
|
2.6
|
%
|
|
3.2
|
%
|
|
3.2
|
%
|
|
3.2
|
%
|
|
3.9
|
%
|
|
3.9
|
%
|
|||||||
5.4
|
%
|
|
5.4
|
%
|
|
5.5
|
%
|
|
5.6
|
%
|
|
5.7
|
%
|
|
6.2
|
%
|
|
6.8
|
%
|
|||||||
43.0
|
%
|
|
44.6
|
%
|
|
47.8
|
%
|
|
47.4
|
%
|
|
47.6
|
%
|
|
57.6
|
%
|
|
60.5
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
141,227
|
|
|
138,210
|
|
|
124,015
|
|
|
121,934
|
|
|
120,230
|
|
|
117,887
|
|
|
65,201
|
|
|||||||
31,272
|
|
|
31,151
|
|
|
31,066
|
|
|
30,986
|
|
|
30,966
|
|
|
31,030
|
|
|
—
|
|
|||||||
53,272
|
|
|
51,988
|
|
|
49,312
|
|
|
48,824
|
|
|
48,100
|
|
|
48,680
|
|
|
34,981
|
|
|||||||
753
|
|
|
842
|
|
|
738
|
|
|
711
|
|
|
734
|
|
|
757
|
|
|
448
|
|
•
|
executing a capital investment program in pursuit of growth opportunities that generate returns equal to or greater than our cost of capital;
|
•
|
expanding our energy distribution and transmission businesses organically as well as into new geographic areas;
|
•
|
providing new services in our current service areas;
|
•
|
expanding our footprint in potential growth markets through strategic acquisitions;
|
•
|
entering new unregulated energy markets and business lines that will complement our existing operating units and growth strategy while capitalizing on opportunities across the energy value chain; and
|
•
|
differentiating the Company as a full-service energy supplier/partner/provider through a customer-centric model.
|
(in thousands except per share data)
|
|
|
|
|
Increase
|
|
|
|
|
|
Increase
|
||||||||||||
For the Year Ended December 31,
|
2017
|
|
2016
|
|
(decrease)
|
|
2016
|
|
2015
|
|
(decrease)
|
||||||||||||
Operating Income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Regulated Energy
|
$
|
73,160
|
|
|
$
|
69,851
|
|
|
$
|
3,309
|
|
|
$
|
69,851
|
|
|
$
|
60,985
|
|
|
$
|
8,866
|
|
Unregulated Energy
|
12,477
|
|
|
13,844
|
|
|
(1,367
|
)
|
|
13,844
|
|
|
16,355
|
|
|
(2,511
|
)
|
||||||
Other businesses and eliminations
|
206
|
|
|
401
|
|
|
(195
|
)
|
|
401
|
|
|
418
|
|
|
(17
|
)
|
||||||
Total Operating Income
|
85,843
|
|
|
84,096
|
|
|
1,747
|
|
|
84,096
|
|
|
77,758
|
|
|
6,338
|
|
||||||
Other income (expense)
|
(765
|
)
|
|
(441
|
)
|
|
(324
|
)
|
|
(441
|
)
|
|
293
|
|
|
(734
|
)
|
||||||
Interest charges
|
12,645
|
|
|
10,639
|
|
|
2,006
|
|
|
10,639
|
|
|
10,006
|
|
|
633
|
|
||||||
Income Before Income Taxes
|
72,433
|
|
|
73,016
|
|
|
(583
|
)
|
|
73,016
|
|
|
68,045
|
|
|
4,971
|
|
||||||
Income taxes
|
14,309
|
|
|
28,341
|
|
|
(14,032
|
)
|
|
28,341
|
|
|
26,905
|
|
|
1,436
|
|
||||||
Net Income
|
$
|
58,124
|
|
|
$
|
44,675
|
|
|
$
|
13,449
|
|
|
$
|
44,675
|
|
|
$
|
41,140
|
|
|
$
|
3,535
|
|
Earnings Per Share of Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
$
|
3.56
|
|
|
$
|
2.87
|
|
|
$
|
0.69
|
|
|
$
|
2.87
|
|
|
$
|
2.73
|
|
|
$
|
0.14
|
|
Diluted
|
$
|
3.55
|
|
|
$
|
2.86
|
|
|
$
|
0.69
|
|
|
$
|
2.86
|
|
|
$
|
2.72
|
|
|
$
|
0.14
|
|
(in thousands, except per share data)
|
|
Pre-tax
Income |
|
Net
Income |
|
Earnings
Per Share |
||||||
Year ended December 31, 2016 Reported Results
|
|
$
|
73,016
|
|
|
$
|
44,675
|
|
|
$
|
2.86
|
|
Adjusting for unusual items:
|
|
|
|
|
|
|
||||||
Federal tax reform impact
|
|
—
|
|
|
14,299
|
|
|
0.87
|
|
|||
PESCO - unrealized MTM loss
|
|
(5,783
|
)
|
|
(3,499
|
)
|
|
(0.21
|
)
|
|||
Impact of winding down of Xeron operations and absence of 2016 loss
|
|
745
|
|
|
451
|
|
|
0.03
|
|
|||
Weather impact
|
|
578
|
|
|
350
|
|
|
0.02
|
|
|||
|
|
(4,460
|
)
|
|
11,601
|
|
|
0.71
|
|
|||
Increased (Decreased) Gross Margins:
|
|
|
|
|
|
|
||||||
Eight Flags' CHP plant
|
|
4,901
|
|
|
2,965
|
|
|
0.19
|
|
|||
Implementation of new base rates for Eastern Shore*
|
|
3,693
|
|
|
2,234
|
|
|
0.14
|
|
|||
PESCO - margin from operations
|
|
3,365
|
|
|
2,036
|
|
|
0.13
|
|
|||
Natural gas growth (excluding service expansions)
|
|
2,818
|
|
|
1,705
|
|
|
0.11
|
|
|||
Service expansions*
|
|
2,062
|
|
|
1,248
|
|
|
0.08
|
|
|||
GRIP*
|
|
1,902
|
|
|
1,151
|
|
|
0.07
|
|
|||
Aspire Energy rates and management fees
|
|
1,125
|
|
|
680
|
|
|
0.04
|
|
|||
Customer consumption (non-weather)
|
|
721
|
|
|
436
|
|
|
0.03
|
|
|||
Implementation of Delaware Division settled rates
|
|
831
|
|
|
503
|
|
|
0.03
|
|
|||
Wholesale propane sales and margins
|
|
678
|
|
|
410
|
|
|
0.03
|
|
|||
Retail propane margins
|
|
645
|
|
|
390
|
|
|
0.02
|
|
|||
Sandpiper SIR
|
|
291
|
|
|
176
|
|
|
0.01
|
|
|||
|
|
23,032
|
|
|
13,934
|
|
|
0.88
|
|
|||
(Increased) Decreased Other Operating Expenses:
|
|
|
|
|
|
|
||||||
Higher payroll expense
|
|
(6,487
|
)
|
|
(3,925
|
)
|
|
(0.25
|
)
|
|||
Higher depreciation, asset removal and property tax costs due to new capital investments
|
|
(5,120
|
)
|
|
(3,098
|
)
|
|
(0.20
|
)
|
|||
Eight Flags' operating expenses
|
|
(2,920
|
)
|
|
(1,767
|
)
|
|
(0.11
|
)
|
|||
Higher benefit and other employee-related expenses
|
|
(1,485
|
)
|
|
(899
|
)
|
|
(0.06
|
)
|
|||
Higher regulatory expenses associated with rate filings
|
|
(1,005
|
)
|
|
(608
|
)
|
|
(0.04
|
)
|
|||
Higher taxes other than property and income
|
|
(739
|
)
|
|
(447
|
)
|
|
(0.03
|
)
|
|||
Lower credit, collections & customer service expenses
|
|
515
|
|
|
311
|
|
|
0.02
|
|
|||
Lower outside services and facilities maintenance costs
|
|
417
|
|
|
252
|
|
|
0.02
|
|
|||
Higher vehicle expenses
|
|
(372
|
)
|
|
(225
|
)
|
|
(0.01
|
)
|
|||
Higher sales and advertising expenses
|
|
(259
|
)
|
|
(157
|
)
|
|
(0.01
|
)
|
|||
|
|
(17,455
|
)
|
|
(10,563
|
)
|
|
(0.67
|
)
|
|||
Increase in outstanding shares from the September 2016 public offering
|
|
—
|
|
|
—
|
|
|
(0.16
|
)
|
|||
Interest charges
|
|
(2,006
|
)
|
|
(1,214
|
)
|
|
(0.08
|
)
|
|||
Change in other expense
|
|
(191
|
)
|
|
(115
|
)
|
|
(0.01
|
)
|
|||
Change in effective tax rate prior to tax reform
|
|
—
|
|
|
(500
|
)
|
|
(0.03
|
)
|
|||
Net other changes
|
|
497
|
|
|
306
|
|
|
0.05
|
|
|||
Year ended December 31, 2017 Reported Results
|
|
$
|
72,433
|
|
|
$
|
58,124
|
|
|
$
|
3.55
|
|
(in thousands, except per share data)
|
|
Pre-tax
Income |
|
Net
Income |
|
Earnings
Per Share |
||||||
Year ended December 31, 2015 Reported Results
|
|
$
|
68,045
|
|
|
$
|
41,140
|
|
|
$
|
2.72
|
|
|
|
|
|
|
|
|
||||||
Adjusting for unusual items:
|
|
|
|
|
|
|
||||||
Weather impact, primarily in the first quarter
|
|
(3,595
|
)
|
|
(2,200
|
)
|
|
(0.15
|
)
|
|||
Net gain from settlement agreement associated with customer billing system
|
|
(1,370
|
)
|
|
(838
|
)
|
|
(0.06
|
)
|
|||
|
|
(4,965
|
)
|
|
(3,038
|
)
|
|
(0.21
|
)
|
|||
Increased (Decreased) Gross Margins:
|
|
|
|
|
|
|
||||||
Service expansions*
|
|
7,192
|
|
|
4,400
|
|
|
0.30
|
|
|||
Eight Flags' CHP*
|
|
4,998
|
|
|
3,058
|
|
|
0.21
|
|
|||
GRIP*
|
|
4,044
|
|
|
2,474
|
|
|
0.17
|
|
|||
Natural gas growth (excluding service expansions)
|
|
2,734
|
|
|
1,673
|
|
|
0.11
|
|
|||
Lower retail propane margins
|
|
(2,770
|
)
|
|
(1,695
|
)
|
|
(0.11
|
)
|
|||
Higher customer consumption - other
|
|
1,899
|
|
|
1,162
|
|
|
0.08
|
|
|||
Implementation of Delaware Division new rates*
|
|
1,487
|
|
|
910
|
|
|
0.06
|
|
|||
PESCO
|
|
1,043
|
|
|
638
|
|
|
0.04
|
|
|||
Xeron trading losses
|
|
(847
|
)
|
|
(518
|
)
|
|
(0.04
|
)
|
|||
Sandpiper margins associated with conversions
|
|
736
|
|
|
450
|
|
|
0.03
|
|
|||
Sharp energy-related services
|
|
(512
|
)
|
|
(313
|
)
|
|
(0.02
|
)
|
|||
|
|
20,004
|
|
|
12,239
|
|
|
0.83
|
|
|||
Increased Other Operating Expenses:
|
|
|
|
|
|
|
||||||
Higher staffing and associated costs
|
|
(4,443
|
)
|
|
(2,718
|
)
|
|
(0.18
|
)
|
|||
Higher depreciation, asset removal and property tax costs due to new capital investments
|
|
(2,952
|
)
|
|
(1,806
|
)
|
|
(0.12
|
)
|
|||
Higher Eight Flags' operating expenses
|
|
(2,432
|
)
|
|
(1,488
|
)
|
|
(0.10
|
)
|
|||
Higher outside service and facility maintenance costs
|
|
(974
|
)
|
|
(596
|
)
|
|
(0.04
|
)
|
|||
|
|
(10,801
|
)
|
|
(6,608
|
)
|
|
(0.44
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net contribution from Aspire Energy
|
|
3,130
|
|
|
1,915
|
|
|
0.09
|
|
|||
Increase in outstanding shares from September 2016 public offering
|
|
—
|
|
|
—
|
|
|
(0.05
|
)
|
|||
Interest charges
|
|
(633
|
)
|
|
(387
|
)
|
|
(0.03
|
)
|
|||
Change in other income (expense)
|
|
(734
|
)
|
|
(449
|
)
|
|
(0.03
|
)
|
|||
Change in effective tax rate
|
|
—
|
|
|
530
|
|
|
0.04
|
|
|||
Net other changes
|
|
(1,030
|
)
|
|
(667
|
)
|
|
(0.06
|
)
|
|||
Year ended December 31, 2016 Reported Results
|
|
$
|
73,016
|
|
|
$
|
44,675
|
|
|
$
|
2.86
|
|
|
Gross Margin for the Period
|
|
||||||||||||||||||||||||||||||
|
Year Ended
|
|
Year Ended
|
|
|
|||||||||||||||||||||||||||
|
December 31,
|
|
December 31,
|
|
Estimate for
|
|
||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
Variance
|
|
2016
|
|
2015
|
|
Variance
|
|
2018
|
|
2019
|
|
||||||||||||||||
Existing Major Projects and Initiatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Capital Investment Projects
|
$
|
38,251
|
|
|
$
|
29,819
|
|
|
$
|
8,432
|
|
|
$
|
29,819
|
|
|
$
|
14,304
|
|
|
$
|
15,515
|
|
|
$
|
34,041
|
|
|
$
|
34,137
|
|
|
Eastern Shore Rate Case
(1)
|
3,693
|
|
|
—
|
|
|
3,693
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,800
|
|
|
9,800
|
|
|
||||||||
Settled Delaware Division Rate Case
|
2,318
|
|
|
1,487
|
|
|
831
|
|
|
1,487
|
|
|
—
|
|
|
1,487
|
|
|
2,250
|
|
|
2,250
|
|
|
||||||||
Electric Limited Proceeding
|
94
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,558
|
|
|
1,558
|
|
|
||||||||
Total Existing Major Projects and Initiatives
|
$
|
44,356
|
|
|
$
|
31,306
|
|
|
$
|
13,050
|
|
|
$
|
31,306
|
|
|
$
|
14,304
|
|
|
$
|
17,002
|
|
|
$
|
47,649
|
|
|
$
|
47,745
|
|
|
Future Major Projects and Initiatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Capital Investment Projects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
2017 Eastern Shore System Expansion
|
$
|
433
|
|
|
$
|
—
|
|
|
$
|
433
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,708
|
|
|
$
|
15,799
|
|
|
Northwest Florida Expansion
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,484
|
|
|
6,032
|
|
|
||||||||
Other Florida Pipeline Expansions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
635
|
|
|
1,131
|
|
|
||||||||
Total Future Major Projects and Initiatives
|
$
|
433
|
|
|
$
|
—
|
|
|
$
|
433
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,827
|
|
|
$
|
22,962
|
|
|
Total
|
$
|
44,789
|
|
|
$
|
31,306
|
|
|
$
|
13,483
|
|
|
$
|
31,306
|
|
|
$
|
14,304
|
|
|
$
|
17,002
|
|
|
$
|
61,476
|
|
|
$
|
70,707
|
|
|
|
|
|
|
|
Gross Margin for the Period
|
||||||||||||||||||
|
Year Ended
|
|
Year Ended
|
||||||||||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
Variance
|
|
2016
|
|
2015
|
|
Variance
|
||||||||||||
Capital Investment Projects:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service Expansions:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-term contracts (Delaware)
|
$
|
6,522
|
|
|
$
|
11,454
|
|
|
$
|
(4,932
|
)
|
|
$
|
11,454
|
|
|
$
|
4,952
|
|
|
$
|
6,502
|
|
Long-term contracts (Delaware)
|
8,141
|
|
|
1,815
|
|
|
6,326
|
|
|
1,815
|
|
|
1,844
|
|
|
(29
|
)
|
||||||
Long-term contracts (Florida)
|
235
|
|
|
—
|
|
|
235
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total Service Expansions
|
$
|
14,898
|
|
|
$
|
13,269
|
|
|
$
|
1,629
|
|
|
$
|
13,269
|
|
|
$
|
6,796
|
|
|
$
|
6,473
|
|
Florida GRIP
|
$
|
13,454
|
|
|
$
|
11,552
|
|
|
$
|
1,902
|
|
|
$
|
11,552
|
|
|
$
|
7,508
|
|
|
$
|
4,044
|
|
Eight Flags' CHP Plant
|
$
|
9,899
|
|
|
$
|
4,998
|
|
|
$
|
4,901
|
|
|
$
|
4,998
|
|
|
$
|
—
|
|
|
$
|
4,998
|
|
Total Capital Investment Projects
|
$
|
38,251
|
|
|
$
|
29,819
|
|
|
$
|
8,432
|
|
|
$
|
29,819
|
|
|
$
|
14,304
|
|
|
$
|
15,515
|
|
For the Years Ended December 31,
|
2017
|
|
2016
|
|
Variance
|
|
2016
|
|
2015
|
|
Variance
|
||||||
Delmarva
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Actual HDD
|
3,800
|
|
|
3,979
|
|
|
(179
|
)
|
|
3,979
|
|
|
4,363
|
|
|
(384
|
)
|
10-Year Average HDD ("Normal")
|
4,374
|
|
|
4,453
|
|
|
(79
|
)
|
|
4,453
|
|
|
4,496
|
|
|
(43
|
)
|
Variance from Normal
|
(574
|
)
|
|
(474
|
)
|
|
|
|
(474
|
)
|
|
(133
|
)
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Florida
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Actual HDD
|
533
|
|
|
672
|
|
|
(139
|
)
|
|
672
|
|
|
569
|
|
|
103
|
|
10-Year Average HDD ("Normal")
|
818
|
|
|
828
|
|
|
(10
|
)
|
|
828
|
|
|
859
|
|
|
(31
|
)
|
Variance from Normal
|
(285
|
)
|
|
(156
|
)
|
|
|
|
(156
|
)
|
|
(290
|
)
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Ohio
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Actual HDD
|
5,126
|
|
|
5,529
|
|
|
(403
|
)
|
|
5,529
|
|
|
2,404
|
|
|
N/A
(1)
|
|
10-Year Average HDD ("Normal")
|
5,914
|
|
|
5,918
|
|
|
(4
|
)
|
|
5,918
|
|
|
2,903
|
|
|
N/A
(1)
|
|
Variance from Normal
|
(788
|
)
|
|
(389
|
)
|
|
|
|
(389
|
)
|
|
(499
|
)
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Florida
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Actual CDD
|
3,013
|
|
|
3,152
|
|
|
(139
|
)
|
|
3,152
|
|
|
3,338
|
|
|
(186
|
)
|
10-Year Average CDD ("Normal")
|
2,865
|
|
|
2,820
|
|
|
45
|
|
|
2,820
|
|
|
2,760
|
|
|
60
|
|
Variance from Normal
|
148
|
|
|
332
|
|
|
|
|
332
|
|
|
578
|
|
|
|
|
Gross Margin Increase
|
||
For the Year Ended
|
12/31/2017
|
||
Growth in wholesale propane margins and sales
|
$
|
678
|
|
Higher retail propane margins per gallon
|
645
|
|
|
Increased customer consumption driven by growth and other factors
|
657
|
|
|
Higher service contract revenue
|
248
|
|
|
Additional growth in AutoGas
|
171
|
|
|
Additional customer consumption - weather
|
122
|
|
|
Other
|
279
|
|
|
|
$
|
2,800
|
|
|
Gross Margin
|
|
Operating Income
|
||||
For the Year ended December 31, 2017
|
|
|
|
||||
(in thousands)
|
|
|
|
||||
As Reported
|
$
|
2,212
|
|
|
$
|
(3,147
|
)
|
Unrealized MTM loss
|
5,783
|
|
|
5,783
|
|
||
Adjusted totals excluding unrealized MTM loss
|
$
|
7,995
|
|
|
$
|
2,636
|
|
|
|
|
|
|
Increase
|
|
|
|
|
|
Increase
|
||||||||||||
For the Year Ended December 31,
|
2017
|
|
2016
|
|
(decrease)
|
|
2016
|
|
2015
|
|
(decrease)
|
||||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue
|
$
|
326,310
|
|
|
$
|
305,689
|
|
|
$
|
20,621
|
|
|
$
|
305,689
|
|
|
$
|
301,902
|
|
|
$
|
3,787
|
|
Cost of sales
|
118,769
|
|
|
109,609
|
|
|
9,160
|
|
|
109,609
|
|
|
122,814
|
|
|
(13,205
|
)
|
||||||
Gross margin
|
207,541
|
|
|
196,080
|
|
|
11,461
|
|
|
196,080
|
|
|
179,088
|
|
|
16,992
|
|
||||||
Operations & maintenance
|
92,355
|
|
|
88,098
|
|
|
4,257
|
|
|
88,098
|
|
|
83,616
|
|
|
4,482
|
|
||||||
Gain from a settlement
|
(130
|
)
|
|
(130
|
)
|
|
—
|
|
|
(130
|
)
|
|
(1,497
|
)
|
|
1,367
|
|
||||||
Depreciation & amortization
|
28,554
|
|
|
25,677
|
|
|
2,877
|
|
|
25,677
|
|
|
24,195
|
|
|
1,482
|
|
||||||
Other taxes
|
13,602
|
|
|
12,584
|
|
|
1,018
|
|
|
12,584
|
|
|
11,789
|
|
|
795
|
|
||||||
Operating expenses
|
134,381
|
|
|
126,229
|
|
|
8,152
|
|
|
126,229
|
|
|
118,103
|
|
|
8,126
|
|
||||||
Operating Income
|
$
|
73,160
|
|
|
$
|
69,851
|
|
|
$
|
3,309
|
|
|
$
|
69,851
|
|
|
$
|
60,985
|
|
|
$
|
8,866
|
|
•
|
$1.6 million
from a
3.8
percent increase in the average number of residential customers served by the Delmarva Peninsula natural gas distribution operations, as well as growth in the number of commercial and industrial customers served; and
|
•
|
$1.2 million
from our Florida natural gas distribution operations' customer growth, with approximately two-thirds of the margin growth generated from commercial and industrial customers and one-third of the margin growth generated from new residential customers.
|
•
|
$1.2 million
from natural gas service expansions related to short-term firm service that commenced in March 2016, following certain measurement and related improvements to Eastern Shore's interconnect with TETLP, which increased Eastern Shore's natural gas receipt capacity from TETLP;
|
•
|
$433,000
from Eastern Shore's new interim services provided to industrial customers in Delaware as a result of a portion of Eastern Shore's 2017 Expansion Project being placed in service in December 2017;
|
•
|
$298,000
from Eastern Shore's increase in rates for a long-term firm service to an industrial customer in New Castle County, Delaware; and
|
•
|
$235,000
generated by Peninsula Pipeline from the New Smyrna Beach Expansion Project.
|
•
|
$4.1 million
in higher depreciation, asset removal and property tax costs associated with recent capital investments;
|
•
|
$3.6 million
in higher payroll expenses for additional personnel to support growth; and
|
•
|
$1.0 million
in increased regulatory expenses, due primarily to costs associated with Eastern Shore’s rate case filing in 2017; partially offset by
|
•
|
$529,000
in lower credit, collection and customer services expenses.
|
•
|
$5.4 million associated with service to an electric power generator in Kent County, Delaware, representing $6.8 million from the short-term OPT Service that commenced in December 2015, which was offset by a $1.4 million decrease in gross margin from the conclusion of the interruptible service Eastern Shore provided to this customer in 2015;
|
•
|
$1.4 million from short-term firm service that commenced in March 2016, following certain measurement and related improvements to Eastern Shore's interconnect with TETLP that increased Eastern Shore's natural gas receipt capacity from TETLP by 53,000 Dts/d, for a total capacity of 160,000 Dts/d; and
|
•
|
$719,000 from natural gas transmission service, which was part of the major expansion initiative in Polk County, Florida.
|
•
|
The foregoing gross margin increases were offset by a gross margin decrease of $243,000 resulting from a reduction in Eastern Shore's rates for a long-term firm service to an industrial customer in New Castle County, Delaware.
|
•
|
$1.5 million from a 3.6 percent increase in the average number of residential customers served by the Delmarva Peninsula natural gas distribution operations, as well as growth in the number of commercial and industrial customers; and
|
•
|
$1.2 million from Florida natural gas distribution operations' customer growth, due primarily to new services to commercial and industrial customers.
|
•
|
$3.6 million in higher staffing and associated costs for additional personnel to support growth;
|
•
|
$2.6 million in higher depreciation, asset removal and property tax costs associated with recent capital investments to support growth and system integrity; and
|
•
|
$1.4 million due to the absence of a $1.5 million gain from a customer billing system settlement in 2015.
|
|
|
|
|
|
Increase
|
|
|
|
|
|
Increase
|
||||||||||||
For the Year Ended December 31,
|
2017
|
|
2016
|
|
(decrease)
|
|
2016
|
|
2015
|
|
(decrease)
|
||||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue
|
$
|
324,595
|
|
|
$
|
203,778
|
|
|
$
|
120,817
|
|
|
$
|
203,778
|
|
|
$
|
162,108
|
|
|
$
|
41,670
|
|
Cost of sales
|
252,023
|
|
|
138,816
|
|
|
113,207
|
|
|
138,816
|
|
|
101,791
|
|
|
37,025
|
|
||||||
Gross margin
|
72,572
|
|
|
64,962
|
|
|
7,610
|
|
|
64,962
|
|
|
60,317
|
|
|
4,645
|
|
||||||
Operations & maintenance
|
48,730
|
|
|
42,659
|
|
|
6,071
|
|
|
42,659
|
|
|
36,536
|
|
|
6,123
|
|
||||||
Depreciation & amortization
|
7,954
|
|
|
6,386
|
|
|
1,568
|
|
|
6,386
|
|
|
5,679
|
|
|
707
|
|
||||||
Other taxes
|
3,411
|
|
|
2,073
|
|
|
1,338
|
|
|
2,073
|
|
|
1,747
|
|
|
326
|
|
||||||
Operating expenses
|
60,095
|
|
|
51,118
|
|
|
8,977
|
|
|
51,118
|
|
|
43,962
|
|
|
7,156
|
|
||||||
Operating Income
|
$
|
12,477
|
|
|
$
|
13,844
|
|
|
$
|
(1,367
|
)
|
|
$
|
13,844
|
|
|
$
|
16,355
|
|
|
$
|
(2,511
|
)
|
•
|
$5.8 million
in the unrealized MTM loss related to PESCO's financial derivatives contracts that were valued at the end of the year; offset by
|
•
|
$3.4 million
in additional gross margin generated primarily from: (a) providing natural gas to end users within one customer pool pursuant to a supplier agreement with Columbia Gas of Ohio, which expired on March 31, 2017, and (b) an increase in commercial and industrial customers served in Florida.
|
•
|
$2.9 million
in higher operating expenses by Eight Flags' CHP plant in support of the margin generated;
|
•
|
$2.9 million
in higher payroll costs for additional personnel to support growth;
|
•
|
$1.0 million
in higher depreciation expense, of which
$476,000
relates to lower depreciation recorded in 2016 as a result of the final accounting for the acquisition of Aspire Energy;
|
•
|
$1.0 million
in higher benefits and employee-related costs in 2017; and
|
•
|
$594,000
in higher taxes, other than property and income taxes.
|
•
|
$2.8 million in operating expenses incurred by Aspire Energy, with $1.6 million representing expenses incurred in the first quarter of 2016, compared to zero in the first quarter of 2015, when Aspire Energy’s operations had not yet commenced;
|
•
|
$2.4 million incurred by Eight Flags' CHP plant, which commenced operations in June 2016;
|
•
|
$817,000 in higher staffing and additional costs for additional personnel to support growth; and
|
•
|
$683,000 in higher outside services costs associated primarily with growth and ongoing compliance activities.
|
(dollars in thousands)
|
|
||
Regulated Energy:
|
|
||
Natural gas distribution
|
$
|
53,899
|
|
Natural gas transmission
|
92,562
|
|
|
Electric distribution
|
7,972
|
|
|
Total Regulated Energy
|
154,433
|
|
|
Unregulated Energy:
|
|
||
Propane distribution
|
11,235
|
|
|
Other unregulated energy
|
5,827
|
|
|
Total Unregulated Energy
|
17,062
|
|
|
Other:
|
|
||
Corporate and other businesses
|
10,097
|
|
|
Total Other
|
10,097
|
|
|
Total 2018 Capital Expenditures
|
$
|
181,592
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||
(in thousands)
|
|
|
|
|
|
|
|
||||||
Long-term debt, net of current maturities
|
$
|
197,395
|
|
|
29
|
%
|
|
$
|
136,954
|
|
|
23
|
%
|
Stockholders’ equity
|
486,294
|
|
|
71
|
%
|
|
446,086
|
|
|
77
|
%
|
||
Total capitalization, excluding short-term borrowings
|
$
|
683,689
|
|
|
100
|
%
|
|
$
|
583,040
|
|
|
100
|
%
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||
(in thousands)
|
|
|
|
|
|
|
|
||||||
Short-term debt
|
$
|
250,969
|
|
|
26
|
%
|
|
$
|
209,871
|
|
|
26
|
%
|
Long-term debt, including current maturities
|
206,816
|
|
|
22
|
%
|
|
149,053
|
|
|
19
|
%
|
||
Stockholders’ equity
|
486,294
|
|
|
52
|
%
|
|
446,086
|
|
|
55
|
%
|
||
Total capitalization, including short-term borrowings
|
$
|
944,079
|
|
|
100
|
%
|
|
$
|
805,010
|
|
|
100
|
%
|
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Average borrowings
|
$
|
183,561
|
|
|
$
|
172,808
|
|
|
$
|
102,220
|
|
Weighted average interest rate
|
2.03
|
%
|
|
1.43
|
%
|
|
1.19
|
%
|
|||
Maximum month-end borrowings
|
$
|
240,671
|
|
|
$
|
201,311
|
|
|
$
|
168,757
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
110,089
|
|
|
$
|
104,141
|
|
|
$
|
104,715
|
|
Investing activities
|
(186,895
|
)
|
|
(170,037
|
)
|
|
(164,539
|
)
|
|||
Financing activities
|
78,242
|
|
|
67,219
|
|
|
58,013
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
1,436
|
|
|
1,323
|
|
|
(1,811
|
)
|
|||
Cash and cash equivalents—beginning of period
|
4,178
|
|
|
2,855
|
|
|
4,574
|
|
|||
Cash and cash equivalents—end of period
|
$
|
5,614
|
|
|
$
|
4,178
|
|
|
$
|
2,763
|
|
•
|
Net income, adjusted for reconciling activities, decreased cash flows by
$485,000
. Key reconciling items included: the revaluation of deferred tax assets and liabilities of our unregulated businesses as a result of the implementation of the TCJA, which decreased our deferred tax expense by
$14.3 million
, higher non-cash adjustments for depreciation and amortization related to increased investing activities and realized losses on sales of assets.
|
•
|
Net cash flows from changes in other inventories decreased by approximately
$6.5 million
, due primarily to purchases of additional pipes and other construction inventory as a result of the large expansion projects currently underway.
|
•
|
Changes in income taxes receivable increased cash flows by
$5.6 million
, due to higher tax refunds as a result of increased tax deductions associated with bonus depreciation.
|
•
|
Changes in net regulatory assets and liabilities increased cash flows by
$4.7 million
, due primarily to the change in fuel costs collected through the various cost recovery mechanisms and GRIP.
|
•
|
Changes in net accounts receivable, accrued revenue, accounts payable and accrued liabilities increased cash flows by
$3.5 million
, due primarily to higher revenues and the timing of customer payments and payments to vendors.
|
•
|
Changes in net prepaid expenses and other current assets and customer deposits and refunds decreased cash flows by
$2.2 million
.
|
•
|
Changes in net accounts receivable and accrued revenue and accounts payable and accrued liabilities decreased cash flows by
$13.2 million
, due primarily to higher revenues and the timing of the receipt of customer payments as well as increased expenses and the timing of payments to vendors.
|
•
|
Net income, adjusted for non-cash adjustments and reconciling activities, increased cash flows by
$18.3 million
, due primarily to an increase in deferred income taxes as a result of the availability and utilization of bonus depreciation in 2016, which resulted in a higher book-to-tax timing difference and higher non-cash adjustments for depreciation and amortization.
|
•
|
Changes in net regulatory assets and liabilities decreased cash flows by
$11.4 million
, due primarily to the change in fuel costs collected through the various fuel cost recovery mechanisms.
|
•
|
The changes in income taxes increased cash flows by
$7.4 million
, due primarily to higher pre-tax income as a result of continued investment in the infrastructure, treatment, storage and distribution of natural gas, propane and electricity.
|
•
|
Net cash flows from changes in propane, natural gas and materials inventories decreased net cash flows by approximately
$4.1 million
.
|
•
|
Cash paid for capital expenditures increased by
$5.4 million
to
$175.3 million
for 2017, compared to
$169.9 million
in 2016.
|
•
|
Net cash of
$11.9 million
was used to acquire assets in various transactions during 2017, including ARM, Chipola and Central Gas; there were no corresponding transactions in 2016.
|
•
|
An increase in cash paid for capital expenditures year-over-year, due primarily to our GRIP investment in our Florida natural gas distribution operations, Eight Flags' construction of the CHP plant and Eastern Shore expansion projects, which collectively decreased cash flows by
$26.3 million
.
|
•
|
In 2015, we paid
$20.7 million
in cash (
$27.5 million
paid, less
$6.8 million
of cash acquired) through our short-term borrowings in conjunction with the acquisition of Gatherco. In addition to the net cash consideration, we also issued
592,970
shares of our common stock, which had no cash flow impact.
|
•
|
We received
$69.8 million
in net cash proceeds from the issuance of the Prudential Shelf Notes, offset by the payment of
$3.0 million
in scheduled long-term debt principal and capital lease obligations payments.
|
•
|
Net cash flows decreased by
$57.4 million
due to the absence of proceeds related to the issuance of common stock during the third quarter of 2016.
|
•
|
Net borrowing under our line of credit arrangements of
$39.3 million
for 2017, compared to net borrowing of
$32.5 million
for 2016, increased cash flows by
$6.8 million
. Change in cash overdrafts decreased cash flows by
$2.2 million
.
|
•
|
We paid
$19.9 million
in cash dividends for 2017 compared to
$17.5 million
for 2016.
|
•
|
Net proceeds of
$57.4 million
, after deducting underwriting commissions and expenses, from the issuance of common stock during the third quarter of 2016, were used to pay down short-term debt under unsecured lines of credit.
|
•
|
Net borrowings/repayments under the line of credit agreements decreased cash flows by
$48.0 million
largely due to the common stock issuance mentioned above.
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
Less than 1
year
|
|
1 — 3 years
|
|
3 — 5 years
|
|
More than 5
years
|
|
Total
|
||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
(1)
|
$
|
7,971
|
|
|
$
|
26,226
|
|
|
$
|
38,700
|
|
|
$
|
132,300
|
|
|
$
|
205,197
|
|
Operating leases
(2)
|
2,665
|
|
|
2,733
|
|
|
1,469
|
|
|
3,702
|
|
|
10,569
|
|
|||||
Capital leases
(2)
|
1,451
|
|
|
620
|
|
|
—
|
|
|
—
|
|
|
2,071
|
|
|||||
Purchase obligations
(3)
|
|
|
|
|
|
|
|
|
|
||||||||||
Transmission capacity
|
32,320
|
|
|
60,197
|
|
|
41,375
|
|
|
146,772
|
|
|
280,664
|
|
|||||
Storage capacity
|
1,336
|
|
|
1,567
|
|
|
567
|
|
|
71
|
|
|
3,541
|
|
|||||
Commodities
|
103,047
|
|
|
42,889
|
|
|
—
|
|
|
—
|
|
|
145,936
|
|
|||||
Electric supply
|
16,216
|
|
|
18,165
|
|
|
2,701
|
|
|
2,755
|
|
|
39,837
|
|
|||||
Unfunded benefits
(4)
|
361
|
|
|
709
|
|
|
914
|
|
|
1,432
|
|
|
3,416
|
|
|||||
Funded benefits
(5)
|
1,898
|
|
|
—
|
|
|
—
|
|
|
6,734
|
|
|
8,632
|
|
|||||
Total Contractual Obligations
|
$
|
167,265
|
|
|
$
|
153,106
|
|
|
$
|
85,726
|
|
|
$
|
293,766
|
|
|
$
|
699,863
|
|
(1)
|
This represents principal payments on long-term debt. See
Item 8, Financial Statements and Supplementary Data,
Note 12
, Long-Term Debt
, for additional information. The expected interest payments on long-term debt are
$8.8 million
,
$16.0 million
,
$12.7 million
and
$18.5 million
, respectively, for the periods indicated above. Expected interest payments for all periods total
$56.1 million
.
|
(2)
|
See
Item 8, Financial Statements and Supplementary Data,
Note 14
, Lease Obligations
, for additional information.
|
(3)
|
See
Item 8, Financial Statements and Supplementary Data,
Note 20
, Other Commitments and Contingencies
, for additional information.
|
(4)
|
We have recorded long-term liabilities of
$3.4 million
at
December 31, 2017
for unfunded post-employment and post-retirement benefit plans. The amounts specified in the table are based on expected payments to current retirees and assume a retirement age of 62 for currently active employees. There are many factors that would cause actual payments to differ from these amounts, including early retirement, future health care costs that differ from past experience and discount rates implicit in calculations. See
Item 8, Financial Statements and Supplementary Data,
Note 16
, Employee Benefit Plan
s, for additional information on the plans.
|
(5)
|
We have recorded long-term liabilities of
$18.4 million
at
December 31, 2017
for two qualified, defined benefit pension plans. The assets funding these plans are in a separate trust and are not considered assets of ours or included in our balance sheets. The Contractual Obligations table above includes
$1.9 million
reflecting the payments we expect to make to the trust funds in 2017. Additional contributions may be required in future years based on the actual return earned by the plan assets and other actuarial assumptions, such as the discount rate and long-term expected rate of return on plan assets. See
Item 8, Financial Statements and Supplementary Data,
Note 16
, Employee Benefit Plan
s, for further information on the plans. Additionally, the Contractual Obligations table above includes deferred compensation obligations totaling
$6.7 million
, funded with Rabbi Trust assets in the same amount. The Rabbi Trust assets are recorded under Investments on the consolidated balance sheets. We assume a retirement age of 65 for purposes of distribution from this account.
|
(in thousands)
|
Balance at December 31, 2016
|
|
Increase (Decrease) in Fair Market Value
|
|
Less Amounts Settled
|
|
Balance at December 31, 2017
|
||||||||
PESCO
|
$
|
(677
|
)
|
|
$
|
(5,470
|
)
|
|
$
|
(6
|
)
|
|
$
|
(6,153
|
)
|
Sharp
|
710
|
|
|
(1,124
|
)
|
|
1,606
|
|
|
1,192
|
|
||||
Total
|
$
|
33
|
|
|
$
|
(6,594
|
)
|
|
$
|
1,600
|
|
|
$
|
(4,961
|
)
|
(in thousands)
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Total Fair Value
|
||||||||||
Price based on ICE - PESCO
|
$
|
(6,163
|
)
|
|
$
|
(297
|
)
|
|
$
|
341
|
|
|
$
|
(34
|
)
|
|
$
|
(6,153
|
)
|
Price based on Mont Belvieu - Sharp
|
1,175
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
1,192
|
|
|||||
Total
|
$
|
(4,988
|
)
|
|
$
|
(280
|
)
|
|
$
|
341
|
|
|
$
|
(34
|
)
|
|
$
|
(4,961
|
)
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Statements of Income
|
|||||||||||
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands, except shares and per share data)
|
|
|
|
|
|
||||||
Operating Revenues
|
|
|
|
|
|
||||||
Regulated Energy
|
$
|
326,310
|
|
|
$
|
305,689
|
|
|
$
|
301,902
|
|
Unregulated Energy
|
324,595
|
|
|
203,778
|
|
|
162,108
|
|
|||
Other businesses and eliminations
|
(33,322
|
)
|
|
(10,607
|
)
|
|
(4,766
|
)
|
|||
Total operating revenues
|
617,583
|
|
|
498,860
|
|
|
459,244
|
|
|||
Operating Expenses
|
|
|
|
|
|
||||||
Regulated Energy cost of sales
|
118,769
|
|
|
109,609
|
|
|
122,814
|
|
|||
Unregulated Energy and other cost of sales
|
219,145
|
|
|
128,434
|
|
|
97,228
|
|
|||
Operations
|
127,571
|
|
|
117,571
|
|
|
107,562
|
|
|||
Maintenance
|
12,701
|
|
|
12,391
|
|
|
11,803
|
|
|||
Gain from a settlement
|
(130
|
)
|
|
(130
|
)
|
|
(1,500
|
)
|
|||
Depreciation and amortization
|
36,599
|
|
|
32,159
|
|
|
29,972
|
|
|||
Other taxes
|
17,085
|
|
|
14,730
|
|
|
13,607
|
|
|||
Total operating expenses
|
531,740
|
|
|
414,764
|
|
|
381,486
|
|
|||
Operating Income
|
85,843
|
|
|
84,096
|
|
|
77,758
|
|
|||
Other (expense) income, net
|
(765
|
)
|
|
(441
|
)
|
|
293
|
|
|||
Interest charges
|
12,645
|
|
|
10,639
|
|
|
10,006
|
|
|||
Income Before Income Taxes
|
72,433
|
|
|
73,016
|
|
|
68,045
|
|
|||
Income taxes
|
14,309
|
|
|
28,341
|
|
|
26,905
|
|
|||
Net Income
|
$
|
58,124
|
|
|
$
|
44,675
|
|
|
$
|
41,140
|
|
|
|
|
|
|
|
||||||
Weighted Average Common Shares Outstanding:
|
|
|
|
|
|
||||||
Basic
|
16,336,789
|
|
|
15,570,539
|
|
|
15,094,423
|
|
|||
Diluted
|
16,383,352
|
|
|
15,613,091
|
|
|
15,143,373
|
|
|||
Earnings Per Share of Common Stock:
|
|
|
|
|
|
||||||
Basic
|
$
|
3.56
|
|
|
$
|
2.87
|
|
|
$
|
2.73
|
|
Diluted
|
$
|
3.55
|
|
|
$
|
2.86
|
|
|
$
|
2.72
|
|
Cash Dividends Declared Per Share of Common Stock
|
$
|
1.2800
|
|
|
$
|
1.2025
|
|
|
$
|
1.1325
|
|
|
|
|
|
|
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
|
|||||||||||
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Net Income
|
$
|
58,124
|
|
|
$
|
44,675
|
|
|
$
|
41,140
|
|
Other Comprehensive Income (Loss), net of tax:
|
|
|
|
|
|
||||||
Employee Benefits, net of tax:
|
|
|
|
|
|
||||||
Amortization of prior service cost, net of tax of $(31), $(29) and $(27), respectively
|
(46
|
)
|
|
(48
|
)
|
|
(40
|
)
|
|||
Net gain, net of tax of $432, $178, and $73, respectively
|
663
|
|
|
268
|
|
|
103
|
|
|||
Cash Flow Hedges, net of tax:
|
|
|
|
|
|
||||||
Unrealized (loss)/gain on commodity contract cash flow hedges, net of tax of $(8), $496 and $(150), respectively
|
(11
|
)
|
|
742
|
|
|
(227
|
)
|
|||
Total Other Comprehensive Income (Loss)
|
606
|
|
|
962
|
|
|
(164
|
)
|
|||
Comprehensive Income
|
$
|
58,730
|
|
|
$
|
45,637
|
|
|
$
|
40,976
|
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Balance Sheets
|
|||||||
|
As of December 31,
|
||||||
Assets
|
2017
|
|
2016
|
||||
(in thousands, except shares and per share data)
|
|
|
|
||||
Property, Plant and Equipment
|
|
|
|
||||
Regulated Energy
|
$
|
1,073,736
|
|
|
$
|
957,681
|
|
Unregulated Energy
|
210,682
|
|
|
196,800
|
|
||
Other businesses and eliminations
|
27,699
|
|
|
21,114
|
|
||
Total property, plant and equipment
|
1,312,117
|
|
|
1,175,595
|
|
||
Less: Accumulated depreciation and amortization
|
(270,599
|
)
|
|
(245,207
|
)
|
||
Plus: Construction work in progress
|
84,509
|
|
|
56,276
|
|
||
Net property, plant and equipment
|
1,126,027
|
|
|
986,664
|
|
||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
5,614
|
|
|
4,178
|
|
||
Accounts receivable (less allowance for uncollectible accounts of $936 and $909, respectively)
|
77,223
|
|
|
62,803
|
|
||
Accrued revenue
|
22,279
|
|
|
16,986
|
|
||
Propane inventory, at average cost
|
8,324
|
|
|
6,457
|
|
||
Other inventory, at average cost
|
12,022
|
|
|
4,576
|
|
||
Regulatory assets
|
10,930
|
|
|
7,694
|
|
||
Storage gas prepayments
|
5,250
|
|
|
5,484
|
|
||
Income taxes receivable
|
14,778
|
|
|
22,888
|
|
||
Prepaid expenses
|
13,621
|
|
|
6,792
|
|
||
Derivative assets, at fair value
|
1,286
|
|
|
823
|
|
||
Other current assets
|
7,260
|
|
|
2,470
|
|
||
Total current assets
|
178,587
|
|
|
141,151
|
|
||
Deferred Charges and Other Assets
|
|
|
|
||||
Goodwill
|
22,104
|
|
|
15,070
|
|
||
Other intangible assets, net
|
4,686
|
|
|
1,843
|
|
||
Investments, at fair value
|
6,756
|
|
|
4,902
|
|
||
Regulatory assets
|
75,575
|
|
|
76,803
|
|
||
Receivables and other deferred charges
|
3,699
|
|
|
2,786
|
|
||
Total deferred charges and other assets
|
112,820
|
|
|
101,404
|
|
||
Total Assets
|
$
|
1,417,434
|
|
|
$
|
1,229,219
|
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Balance Sheets
|
|||||||
|
As of December 31,
|
||||||
Capitalization and Liabilities
|
2017
|
|
2016
|
||||
(in thousands, except shares and per share data)
|
|
|
|
||||
Capitalization
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Preferred stock, par value $0.01 per share (authorized 2,000,000 shares), no shares issued and outstanding
|
$
|
—
|
|
|
$
|
—
|
|
Common stock, par value $0.4867 per share (authorized 50,000,000 shares)
|
7,955
|
|
|
7,935
|
|
||
Additional paid-in capital
|
253,470
|
|
|
250,967
|
|
||
Retained earnings
|
229,141
|
|
|
192,062
|
|
||
Accumulated other comprehensive loss
|
(4,272
|
)
|
|
(4,878
|
)
|
||
Deferred compensation obligation
|
3,395
|
|
|
2,416
|
|
||
Treasury stock
|
(3,395
|
)
|
|
(2,416
|
)
|
||
Total stockholders’ equity
|
486,294
|
|
|
446,086
|
|
||
Long-term debt, net of current maturities
|
197,395
|
|
|
136,954
|
|
||
Total capitalization
|
683,689
|
|
|
583,040
|
|
||
Current Liabilities
|
|
|
|
||||
Current portion of long-term debt
|
9,421
|
|
|
12,099
|
|
||
Short-term borrowing
|
250,969
|
|
|
209,871
|
|
||
Accounts payable
|
74,688
|
|
|
56,935
|
|
||
Customer deposits and refunds
|
34,751
|
|
|
29,238
|
|
||
Accrued interest
|
1,742
|
|
|
1,312
|
|
||
Dividends payable
|
5,312
|
|
|
4,973
|
|
||
Accrued compensation
|
13,112
|
|
|
10,496
|
|
||
Regulatory liabilities
|
6,485
|
|
|
1,291
|
|
||
Derivative liabilities, at fair value
|
6,247
|
|
|
773
|
|
||
Other accrued liabilities
|
10,273
|
|
|
7,063
|
|
||
Total current liabilities
|
413,000
|
|
|
334,051
|
|
||
Deferred Credits and Other Liabilities
|
|
|
|
||||
Deferred income taxes
|
135,850
|
|
|
222,894
|
|
||
Regulatory liabilities
|
140,978
|
|
|
43,064
|
|
||
Environmental liabilities
|
8,263
|
|
|
8,592
|
|
||
Other pension and benefit costs
|
29,699
|
|
|
32,828
|
|
||
Deferred investment tax credits and other liabilities
|
5,955
|
|
|
4,750
|
|
||
Total deferred credits and other liabilities
|
320,745
|
|
|
312,128
|
|
||
Environmental and other commitments and contingencies (Note 19 and 20)
|
|
|
|
|
|
||
Total Capitalization and Liabilities
|
$
|
1,417,434
|
|
|
$
|
1,229,219
|
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Statements of Cash Flows
|
|||||||||||
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Operating Activities
|
|
|
|
|
|
||||||
Net Income
|
$
|
58,124
|
|
|
$
|
44,675
|
|
|
$
|
41,140
|
|
Adjustments to reconcile net income to net operating cash:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
36,599
|
|
|
32,159
|
|
|
29,972
|
|
|||
Depreciation and accretion included in operations expenses
|
8,122
|
|
|
7,334
|
|
|
6,978
|
|
|||
Deferred income taxes, net
|
11,085
|
|
|
31,257
|
|
|
20,520
|
|
|||
Realized (gain) loss on sale of assets/investments
|
3,179
|
|
|
695
|
|
|
(340
|
)
|
|||
Unrealized (gain) loss on investments/commodity contracts
|
(1,001
|
)
|
|
(385
|
)
|
|
96
|
|
|||
Employee benefits and compensation
|
1,577
|
|
|
1,887
|
|
|
1,235
|
|
|||
Share-based compensation
|
2,490
|
|
|
2,367
|
|
|
1,937
|
|
|||
Other, net
|
(750
|
)
|
|
(79
|
)
|
|
47
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable and accrued revenue
|
(19,506
|
)
|
|
(27,013
|
)
|
|
17,097
|
|
|||
Propane inventory, storage gas and other inventory
|
(9,036
|
)
|
|
(2,531
|
)
|
|
1,527
|
|
|||
Regulatory assets/liabilities, net
|
(2,855
|
)
|
|
(7,523
|
)
|
|
3,883
|
|
|||
Prepaid expenses and other current assets
|
(7,001
|
)
|
|
(1,387
|
)
|
|
(759
|
)
|
|||
Accounts payable and other accrued liabilities
|
15,596
|
|
|
19,599
|
|
|
(11,324
|
)
|
|||
Income taxes receivable (payable)
|
8,110
|
|
|
2,466
|
|
|
(4,967
|
)
|
|||
Customer deposits and refunds
|
5,513
|
|
|
2,065
|
|
|
1,976
|
|
|||
Accrued compensation
|
2,488
|
|
|
358
|
|
|
(331
|
)
|
|||
Other assets and liabilities, net
|
(2,645
|
)
|
|
(1,803
|
)
|
|
(3,972
|
)
|
|||
Net cash provided by operating activities
|
110,089
|
|
|
104,141
|
|
|
104,715
|
|
|||
Investing Activities
|
|
|
|
|
|
||||||
Property, plant and equipment expenditures
|
(175,329
|
)
|
|
(169,861
|
)
|
|
(143,599
|
)
|
|||
Proceeds from sale of assets
|
708
|
|
|
174
|
|
|
164
|
|
|||
Acquisitions, net of cash acquired
|
(11,945
|
)
|
|
—
|
|
|
(20,930
|
)
|
|||
Environmental expenditures
|
(329
|
)
|
|
(350
|
)
|
|
(174
|
)
|
|||
Net cash used in investing activities
|
(186,895
|
)
|
|
(170,037
|
)
|
|
(164,539
|
)
|
|||
Financing Activities
|
|
|
|
|
|
||||||
Common stock dividends
|
(19,928
|
)
|
|
(17,482
|
)
|
|
(15,924
|
)
|
|||
Issuance of stock for Dividend Reinvestment Plan
|
89
|
|
|
811
|
|
|
813
|
|
|||
Proceeds from issuance of common stock, net of expenses
|
(10
|
)
|
|
57,360
|
|
|
—
|
|
|||
Tax withholding payments related to net settled stock compensation
|
(692
|
)
|
|
(770
|
)
|
|
(592
|
)
|
|||
Change in cash overdrafts due to outstanding checks
|
1,738
|
|
|
3,920
|
|
|
2,450
|
|
|||
Net borrowing under line of credit agreements
|
39,338
|
|
|
32,526
|
|
|
82,178
|
|
|||
Proceeds from issuance of long-term debt
|
69,807
|
|
|
—
|
|
|
—
|
|
|||
Repayment of long-term debt and capital lease obligation
|
(12,100
|
)
|
|
(9,146
|
)
|
|
(10,820
|
)
|
|||
Net cash provided by financing activities
|
78,242
|
|
|
67,219
|
|
|
58,105
|
|
|||
Net Increase (Decrease) in Cash and Cash Equivalents
|
1,436
|
|
|
1,323
|
|
|
(1,719
|
)
|
|||
Cash and Cash Equivalents — Beginning of Period
|
4,178
|
|
|
2,855
|
|
|
4,574
|
|
|||
Cash and Cash Equivalents — End of Period
|
$
|
5,614
|
|
|
$
|
4,178
|
|
|
$
|
2,855
|
|
Chesapeake Utilities Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity
|
||||||||||||||||||||||||||||||
|
Common Stock
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
(in thousands, except shares and per share data)
|
Number
of
Shares
(2)
|
|
Par
Value
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Deferred
Compensation
|
|
Treasury
Stock
|
|
Total
|
|||||||||||||||
Balance at December 31, 2014
|
14,588,711
|
|
|
$
|
7,100
|
|
|
$
|
156,581
|
|
|
$
|
142,317
|
|
|
$
|
(5,676
|
)
|
|
$
|
1,258
|
|
|
$
|
(1,258
|
)
|
|
$
|
300,322
|
|
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
41,140
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41,140
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(164
|
)
|
|
—
|
|
|
—
|
|
|
(164
|
)
|
|||||||
Dividends declared ($1.1325 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,222
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,222
|
)
|
|||||||
Retirement savings plan and dividend reinvestment plan
|
43,275
|
|
|
21
|
|
|
2,214
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,235
|
|
|||||||
Common stock issued in acquisition
|
592,970
|
|
|
289
|
|
|
29,876
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,165
|
|
|||||||
Share-based compensation and tax benefit
(4) (5)
|
45,703
|
|
|
22
|
|
|
1,640
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,662
|
|
|||||||
Treasury stock activities
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
625
|
|
|
(625
|
)
|
|
—
|
|
|||||||
Balance at December 31, 2015
|
15,270,659
|
|
|
7,432
|
|
|
190,311
|
|
|
166,235
|
|
|
(5,840
|
)
|
|
1,883
|
|
|
(1,883
|
)
|
|
358,138
|
|
|||||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
44,675
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,675
|
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
962
|
|
|
—
|
|
|
—
|
|
|
962
|
|
|||||||
Dividends declared ($1.2025 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,848
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,848
|
)
|
|||||||
Retirement savings plan and dividend reinvestment plan
|
36,253
|
|
|
17
|
|
|
2,225
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,242
|
|
|||||||
Stock issuance
(3)
|
960,488
|
|
|
467
|
|
|
56,893
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,360
|
|
|||||||
Share-based compensation and tax benefit
(4) (5)
|
36,099
|
|
|
19
|
|
|
1,538
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,557
|
|
|||||||
Treasury stock activities
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
533
|
|
|
(533
|
)
|
|
—
|
|
|||||||
Balance at December 31, 2016
|
16,303,499
|
|
|
7,935
|
|
|
250,967
|
|
|
192,062
|
|
|
(4,878
|
)
|
|
2,416
|
|
|
(2,416
|
)
|
|
446,086
|
|
|||||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
58,124
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58,124
|
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
606
|
|
|
—
|
|
|
—
|
|
|
606
|
|
|||||||
Dividends declared ($1.2800 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,045
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,045
|
)
|
|||||||
Dividend reinvestment plan
|
10,771
|
|
|
5
|
|
|
730
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
735
|
|
|||||||
Stock issuance
(3)
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||||
Share-based compensation and tax benefit
(4) (5)
|
30,172
|
|
|
15
|
|
|
1,783
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,798
|
|
|||||||
Treasury stock activities
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
979
|
|
|
(979
|
)
|
|
—
|
|
|||||||
Balance at December 31, 2017
|
16,344,442
|
|
|
$
|
7,955
|
|
|
$
|
253,470
|
|
|
$
|
229,141
|
|
|
$
|
(4,272
|
)
|
|
$
|
3,395
|
|
|
$
|
(3,395
|
)
|
|
$
|
486,294
|
|
(1)
|
2,000,000
shares of preferred stock at
$0.01
par value per share have been authorized. No shares have been issued or are outstanding; accordingly, no information has been included in the Statements of Stockholders’ Equity.
|
(2)
|
Includes
90,961
,
76,745
and
70,631
shares at December 31, 2017, 2016 and 2015, respectively, held in a Rabbi Trust related to our Non-Qualified Deferred Compensation Plan.
|
(3)
|
On September 22, 2016, we completed a public offering of
960,488
shares of our common stock at a price per share of
$62.26
. The net proceeds from the sale of common stock, after deducting underwriting commissions and expenses, were approximately
$57.4 million
.
|
(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 2017, 2016 and 2015, we withheld
10,269
,
12,031
and
12,620
shares, respectively, for taxes.
|
|
As of December 31,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Property, plant and equipment
|
|
|
|
||||
Regulated Energy
|
|
|
|
||||
Natural gas distribution – Delmarva Peninsula
|
$
|
234,654
|
|
|
$
|
220,083
|
|
Natural gas distribution – Florida
|
354,495
|
|
|
331,281
|
|
||
Natural gas transmission – Delmarva
|
357,264
|
|
|
285,746
|
|
||
Natural gas transmission – Florida
|
27,096
|
|
|
27,018
|
|
||
Electric distribution – Florida
|
100,227
|
|
|
93,553
|
|
||
Unregulated Energy
|
|
|
|
||||
Propane distribution – Delmarva Peninsula
|
79,139
|
|
|
73,686
|
|
||
Propane distribution – Florida
|
29,038
|
|
|
26,359
|
|
||
Other unregulated natural gas services – Ohio
|
66,037
|
|
|
61,383
|
|
||
CHP - Florida
|
35,239
|
|
|
35,237
|
|
||
Other unregulated energy
|
1,229
|
|
|
135
|
|
||
Other
|
27,699
|
|
|
21,114
|
|
||
Total property, plant and equipment
|
1,312,117
|
|
|
1,175,595
|
|
||
Less: Accumulated depreciation and amortization
|
(270,599
|
)
|
|
(245,207
|
)
|
||
Plus: Construction work in progress
|
84,509
|
|
|
56,276
|
|
||
Net property, plant and equipment
|
$
|
1,126,027
|
|
|
$
|
986,664
|
|
|
2017
|
|
2016
|
|
2015
|
Natural gas distribution – Delmarva Peninsula
|
2.5%
|
|
2.5%
|
|
2.4%
|
Natural gas distribution – Florida
|
2.9%
|
|
2.9%
|
|
2.9%
|
Natural gas transmission – Delmarva Peninsula
|
2.8%
|
|
2.7%
|
|
2.7%
|
Natural gas transmission – Florida
|
3.5%
|
|
3.9%
|
|
4.0%
|
Electric distribution – Florida
|
3.4%
|
|
3.5%
|
|
3.5%
|
Asset Description
|
Useful Life
|
Propane distribution mains
|
10-37 years
|
Propane bulk plants and tanks
|
10-40 years
|
Propane equipment
|
5-33 years
|
Meters and meter installations
|
5-33 years
|
Measuring and regulating station equipment
|
5-37 years
|
Natural gas pipelines
|
45 years
|
Natural gas right of ways
|
Perpetual
|
CHP plant
|
30 years
|
Natural gas processing equipment
|
20-25 years
|
Office furniture and equipment
|
3-10 years
|
Transportation equipment
|
4-20 years
|
Structures and improvements
|
5-45 years
|
Other
|
Various
|
•
|
An entity need not reassess whether any expired or existing contracts are or contain leases.
|
•
|
An entity need not reassess the lease classification for any expired or existing leases (that is, all existing leases that were classified as operating leases in accordance with Topic 840 will continue to be classified as operating leases, and all existing leases that were classified as capital leases in accordance with Topic 840 will continue to be classified as capital leases).
|
•
|
An entity may elect to use hindsight in determining the lease term and in assessing impairment of the entity’s right-of-use assets.
|
•
|
An entity may elect to apply the provisions of the new lease guidance at the effective date, without adjusting the comparative periods presented.
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands, except shares and per share data)
|
|
|
|
|
|
||||||
Calculation of Basic Earnings Per Share:
|
|
|
|
|
|
||||||
Net Income
|
$
|
58,124
|
|
|
$
|
44,675
|
|
|
$
|
41,140
|
|
Weighted average shares outstanding
|
16,336,789
|
|
|
15,570,539
|
|
|
15,094,423
|
|
|||
Basic Earnings Per Share
|
$
|
3.56
|
|
|
$
|
2.87
|
|
|
$
|
2.73
|
|
|
|
|
|
|
|
||||||
Calculation of Diluted Earnings Per Share:
|
|
|
|
|
|
||||||
Net Income
|
$
|
58,124
|
|
|
$
|
44,675
|
|
|
$
|
41,140
|
|
Reconciliation of Denominator:
|
|
|
|
|
|
||||||
Weighted average shares outstanding — Basic
|
16,336,789
|
|
|
15,570,539
|
|
|
15,094,423
|
|
|||
Effect of dilutive securities — Share-based compensation
|
46,563
|
|
|
42,552
|
|
|
48,950
|
|
|||
Adjusted denominator — Diluted
|
16,383,352
|
|
|
15,613,091
|
|
|
15,143,373
|
|
|||
Diluted Earnings Per Share
|
$
|
3.55
|
|
|
$
|
2.86
|
|
|
$
|
2.72
|
|
(in thousands)
|
Net Purchase Price
|
||
Chesapeake Utilities common stock issued
|
$
|
30,164
|
|
Cash
|
27,494
|
|
|
Acquired debt
|
1,696
|
|
|
Aggregate amount paid in the acquisition
|
59,354
|
|
|
Less: cash acquired
|
(6,806
|
)
|
|
Net amount paid in the acquisition
|
$
|
52,548
|
|
(in thousands)
|
Purchase Price Allocation
|
||
Purchase price
|
$
|
57,658
|
|
|
|
||
Property plant and equipment
|
53,203
|
|
|
Cash
|
6,806
|
|
|
Accounts receivable
|
3,629
|
|
|
Income taxes receivable
|
3,163
|
|
|
Other assets
|
425
|
|
|
Total assets acquired
|
67,226
|
|
|
|
|
||
Long-term debt
|
1,696
|
|
|
Deferred income taxes
|
13,409
|
|
|
Accounts payable
|
3,837
|
|
|
Other current liabilities
|
745
|
|
|
Total liabilities assumed
|
19,687
|
|
|
Net identifiable assets acquired
|
47,539
|
|
|
Goodwill
|
$
|
10,119
|
|
•
|
Regulated Energy
. Includes 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 propane distribution as well as natural gas marketing, gathering, processing, transportation and supply. These operations are unregulated as to their rates and services. Effective June 2016, this segment includes electricity and steam generation through Eight Flags' CHP plant. Through March 2017, this segment also included the operations of Xeron, our propane and crude oil trading subsidiary that began winding down operations at the end of the first quarter of 2017. 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.
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Operating Revenues, Unaffiliated Customers
|
|
|
|
|
|
||||||
Regulated Energy
|
$
|
316,971
|
|
|
$
|
302,402
|
|
|
$
|
300,674
|
|
Unregulated Energy
|
300,612
|
|
|
196,458
|
|
|
158,570
|
|
|||
Total operating revenues, unaffiliated customers
|
$
|
617,583
|
|
|
$
|
498,860
|
|
|
$
|
459,244
|
|
Intersegment Revenues
(1)
|
|
|
|
|
|
||||||
Regulated Energy
|
$
|
9,339
|
|
|
$
|
3,287
|
|
|
$
|
1,228
|
|
Unregulated Energy
|
23,983
|
|
|
7,321
|
|
|
3,537
|
|
|||
Other businesses
|
774
|
|
|
880
|
|
|
880
|
|
|||
Total intersegment revenues
|
$
|
34,096
|
|
|
$
|
11,488
|
|
|
$
|
5,645
|
|
Operating Income
|
|
|
|
|
|
||||||
Regulated Energy
|
$
|
73,160
|
|
|
$
|
69,851
|
|
|
$
|
60,985
|
|
Unregulated Energy
|
12,477
|
|
|
13,844
|
|
|
16,355
|
|
|||
Other businesses and eliminations
|
206
|
|
|
401
|
|
|
418
|
|
|||
Operating Income
|
85,843
|
|
|
84,096
|
|
|
77,758
|
|
|||
Other (expense) income
|
(765
|
)
|
|
(441
|
)
|
|
293
|
|
|||
Interest charges
|
12,645
|
|
|
10,639
|
|
|
10,006
|
|
|||
Income Before Income taxes
|
72,433
|
|
|
73,016
|
|
|
68,045
|
|
|||
Income taxes
|
14,309
|
|
|
28,341
|
|
|
26,905
|
|
|||
Net Income
|
$
|
58,124
|
|
|
$
|
44,675
|
|
|
$
|
41,140
|
|
Depreciation and Amortization
|
|
|
|
|
|
||||||
Regulated Energy
|
$
|
28,554
|
|
|
$
|
25,677
|
|
|
$
|
24,195
|
|
Unregulated Energy
|
7,954
|
|
|
6,386
|
|
|
5,679
|
|
|||
Other businesses and eliminations
|
91
|
|
|
96
|
|
|
98
|
|
|||
Total depreciation and amortization
|
$
|
36,599
|
|
|
$
|
32,159
|
|
|
$
|
29,972
|
|
Capital Expenditures
|
|
|
|
|
|
||||||
Regulated Energy
|
$
|
159,011
|
|
|
$
|
139,994
|
|
|
$
|
98,372
|
|
Unregulated Energy
|
26,190
|
|
|
23,984
|
|
|
90,895
|
|
|||
Other businesses
|
5,902
|
|
|
5,398
|
|
|
5,994
|
|
|||
Total capital expenditures
|
$
|
191,103
|
|
|
$
|
169,376
|
|
|
$
|
195,261
|
|
(1)
|
All significant intersegment revenues are billed at market rates and have been eliminated from consolidated revenues.
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
Identifiable Assets
|
|
|
|
||||
Regulated Energy
|
$
|
1,121,673
|
|
|
$
|
986,752
|
|
Unregulated Energy
|
261,541
|
|
|
226,368
|
|
||
Other businesses
|
34,220
|
|
|
16,099
|
|
||
Total identifiable assets
|
$
|
1,417,434
|
|
|
$
|
1,229,219
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
12,420
|
|
|
$
|
10,315
|
|
|
$
|
9,497
|
|
Cash paid for income taxes, net of refunds
|
$
|
(4,114
|
)
|
|
$
|
(5,308
|
)
|
|
$
|
11,076
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Capital property and equipment acquired on account, but not paid for as of December 31
|
$
|
15,457
|
|
|
$
|
9,791
|
|
|
$
|
10,268
|
|
Common stock issued for the Retirement Savings Plan
|
$
|
—
|
|
|
$
|
777
|
|
|
$
|
690
|
|
Common stock issued under the SICP
|
$
|
1,127
|
|
|
$
|
1,027
|
|
|
$
|
1,594
|
|
Capital lease obligation
|
$
|
2,070
|
|
|
$
|
3,471
|
|
|
$
|
4,824
|
|
Common stock issued in acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30,164
|
|
|
|
|
Year Ended
|
|
||
(in thousands)
|
|
|
December 31, 2016
(1)
|
|
||
Commodity contracts
|
|
$
|
(233
|
)
|
|
|
Fair value adjustment for natural gas inventory designated as the hedged item
|
|
681
|
|
|
||
Total increase in purchased gas cost
|
|
$
|
448
|
|
|
|
|
|
|
|
|
||
The increase in purchased gas cost is comprised of the following:
|
|
|
|
|||
Basis ineffectiveness
|
|
$
|
(83
|
)
|
|
|
Timing ineffectiveness
|
|
531
|
|
|
||
Total ineffectiveness
|
|
$
|
448
|
|
|
(1)
|
There were no natural gas futures commodity contracts designated as fair value hedges in 2017.
|
|
|
At December 31, 2017
|
||||||||||
(in thousands)
|
|
Gross amounts
|
|
Amounts offset
|
|
Net amounts
|
||||||
Accounts receivable
|
|
$
|
8,283
|
|
|
$
|
2,391
|
|
|
$
|
5,892
|
|
Accounts payable
|
|
$
|
16,643
|
|
|
$
|
2,391
|
|
|
$
|
14,252
|
|
|
|
At December 31, 2016
|
||||||||||
(in thousands)
|
|
Gross amounts
|
|
Amounts offset
|
|
Net amounts
|
||||||
Accounts receivable
|
|
$
|
2,764
|
|
|
$
|
1,431
|
|
|
$
|
1,333
|
|
Accounts payable
|
|
$
|
5,335
|
|
|
$
|
1,431
|
|
|
$
|
3,904
|
|
|
Asset Derivatives
|
||||||||
|
|
|
Fair Value As Of
|
||||||
(in thousands)
|
Balance Sheet Location
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
||||
Propane swap agreements
|
Derivative assets, at fair value
|
|
$
|
13
|
|
|
$
|
8
|
|
Put options
|
Derivative assets, at fair value
|
|
—
|
|
|
9
|
|
||
Derivatives designated as cash flow hedges
|
|
|
|
|
|
||||
Natural gas futures contracts
|
Derivative assets, at fair value
|
|
92
|
|
|
113
|
|
||
Propane swap agreements
|
Derivative assets, at fair value
|
|
1,181
|
|
|
693
|
|
||
Total asset derivatives
|
|
|
$
|
1,286
|
|
|
$
|
823
|
|
|
Liability Derivatives
|
||||||||
|
|
|
Fair Value As Of
|
||||||
(in thousands)
|
Balance Sheet Location
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
||||
Natural gas futures contracts
|
Derivative liabilities, at fair value
|
|
$
|
5,776
|
|
|
$
|
773
|
|
Derivatives designated as cash flow hedges
|
|
|
|
|
|
||||
Natural gas swap contracts
|
Derivative liabilities, at fair value
|
|
469
|
|
|
—
|
|
||
Propane swap agreements
|
Derivative liabilities, at fair value
|
|
2
|
|
|
—
|
|
||
Total liability derivatives
|
|
|
$
|
6,247
|
|
|
$
|
773
|
|
(1)
|
All of the realized and unrealized gain (loss) on forward contracts represents the effect of trading activities on our consolidated statements of income.
|
(2)
|
As a fair value hedge with no ineffective portion, the unrealized gains and losses associated with this call option are recorded in cost of sales, offset by the corresponding change in the value of propane inventory (hedged item), which is also recorded in cost of sales. The amounts in cost of sales offset to zero, and the unrealized gains and losses of this call option effectively changed the value of propane inventory on the consolidated balance sheets.
|
|
|
|
Fair Value Measurements Using:
|
||||||||||||
As of December 31, 2017
|
Fair Value
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
(in thousands)
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments—equity securities
|
$
|
22
|
|
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investments—guaranteed income fund
|
648
|
|
|
—
|
|
|
—
|
|
|
648
|
|
||||
Investments—mutual funds and other
|
6,086
|
|
|
6,086
|
|
|
—
|
|
|
—
|
|
||||
Total investments
|
6,756
|
|
|
6,108
|
|
|
—
|
|
|
648
|
|
||||
Derivative assets
|
1,286
|
|
|
—
|
|
|
1,286
|
|
|
—
|
|
||||
Total assets
|
$
|
8,042
|
|
|
$
|
6,108
|
|
|
$
|
1,286
|
|
|
$
|
648
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
6,247
|
|
|
$
|
—
|
|
|
$
|
6,247
|
|
|
$
|
—
|
|
|
For the Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
(in thousands)
|
|
|
|
||||
Beginning Balance
|
$
|
561
|
|
|
$
|
279
|
|
Purchases and adjustments
|
79
|
|
|
123
|
|
||
Transfers/disbursements
|
(53
|
)
|
|
151
|
|
||
Investment income
|
61
|
|
|
8
|
|
||
Ending Balance
|
$
|
648
|
|
|
$
|
561
|
|
|
As of December 31,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Rabbi trust (associated with the Non-Qualified Deferred Compensation Plan)
|
$
|
6,734
|
|
|
$
|
4,881
|
|
Investments in equity securities
|
22
|
|
|
21
|
|
||
Total
|
$
|
6,756
|
|
|
$
|
4,902
|
|
|
As of December 31,
|
||||||||||||||
|
2017
|
|
2016
|
||||||||||||
(in thousands)
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Customer lists
|
$
|
7,393
|
|
|
$
|
2,880
|
|
|
$
|
4,012
|
|
|
$
|
2,379
|
|
Non-Compete agreements
|
270
|
|
|
175
|
|
|
270
|
|
|
146
|
|
||||
Other
|
270
|
|
|
192
|
|
|
270
|
|
|
184
|
|
||||
Total
|
$
|
7,933
|
|
|
$
|
3,247
|
|
|
$
|
4,552
|
|
|
$
|
2,709
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Current Income Tax Expense
|
|
|
|
|
|
||||||
Federal
|
$
|
2,803
|
|
|
$
|
(4,898
|
)
|
|
$
|
4,875
|
|
State
|
492
|
|
|
2,053
|
|
|
1,533
|
|
|||
Other
|
(71
|
)
|
|
(71
|
)
|
|
(23
|
)
|
|||
Total current income tax expense
|
3,224
|
|
|
(2,916
|
)
|
|
6,385
|
|
|||
Deferred Income Tax Expense
(1)
|
|
|
|
|
|
||||||
Property, plant and equipment
|
8,314
|
|
|
31,062
|
|
|
21,205
|
|
|||
Deferred gas costs
|
2,002
|
|
|
1,163
|
|
|
(1,539
|
)
|
|||
Pensions and other employee benefits
|
180
|
|
|
237
|
|
|
(84
|
)
|
|||
FPU merger-related premium cost and deferred gain
|
(1,148
|
)
|
|
(572
|
)
|
|
(556
|
)
|
|||
Net operating loss carryforwards
|
193
|
|
|
(9
|
)
|
|
2,078
|
|
|||
Other
|
1,544
|
|
|
(624
|
)
|
|
(584
|
)
|
|||
Total deferred income tax expense
|
11,085
|
|
|
31,257
|
|
|
20,520
|
|
|||
Total Income Tax Expense
|
$
|
14,309
|
|
|
$
|
28,341
|
|
|
$
|
26,905
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Reconciliation of Effective Income Tax Rates
|
|
|
|
|
|
||||||
Federal income tax expense
(1)
|
$
|
25,351
|
|
|
$
|
22,759
|
|
|
$
|
23,865
|
|
State income taxes, net of federal benefit
|
1,894
|
|
|
3,422
|
|
|
3,062
|
|
|||
ESOP dividend deduction
|
(257
|
)
|
|
(264
|
)
|
|
(263
|
)
|
|||
Revaluation of deferred tax assets and liabilities
|
(14,299
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
1,620
|
|
|
2,424
|
|
|
241
|
|
|||
Total Income Tax Expense
|
$
|
14,309
|
|
|
$
|
28,341
|
|
|
$
|
26,905
|
|
Effective Income Tax Rate
(2)
|
19.75
|
%
|
|
38.81
|
%
|
|
39.54
|
%
|
(1)
|
Federal income taxes were calculated at
35 percent
for each year represented.
|
(2)
|
Effective tax rate for 2017 includes the impact of the revaluation of deferred tax assets and liabilities for our unregulated businesses due to implementation of the TCJA.
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
(in thousands)
|
|
|
|
||||
Deferred Income Taxes
|
|
|
|
||||
Deferred income tax liabilities:
|
|
|
|
||||
Property, plant and equipment
|
$
|
133,581
|
|
|
$
|
218,074
|
|
Acquisition adjustment
|
9,323
|
|
|
14,840
|
|
||
Loss on reacquired debt
|
153
|
|
|
442
|
|
||
Deferred gas costs
|
2,574
|
|
|
1,846
|
|
||
Other
|
5,422
|
|
|
6,375
|
|
||
Total deferred income tax liabilities
|
151,053
|
|
|
241,577
|
|
||
Deferred income tax assets:
|
|
|
|
||||
Pension and other employee benefits
|
4,698
|
|
|
6,230
|
|
||
Environmental costs
|
1,744
|
|
|
2,592
|
|
||
Net operating loss carryforwards
|
1,625
|
|
|
952
|
|
||
Investment tax credit carryforwards
|
—
|
|
|
2,643
|
|
||
Self insurance
|
164
|
|
|
189
|
|
||
Storm reserve liability
|
717
|
|
|
1,131
|
|
||
Other
|
6,255
|
|
|
4,946
|
|
||
Total deferred income tax assets
|
15,203
|
|
|
18,683
|
|
||
Deferred Income Taxes Per Consolidated Balance Sheets
|
$
|
135,850
|
|
|
$
|
222,894
|
|
|
As of December 31,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
FPU secured first mortgage bonds:
|
|
|
|
||||
9.08% bond, due June 1, 2022
|
$
|
7,982
|
|
|
$
|
7,978
|
|
Uncollateralized Senior Notes:
|
|
|
|
||||
6.64% note, due October 31, 2017
|
—
|
|
|
2,727
|
|
||
5.50% note, due October 12, 2020
|
6,000
|
|
|
8,000
|
|
||
5.93% note, due October 31, 2023
|
18,000
|
|
|
21,000
|
|
||
5.68% note, due June 30, 2026
|
26,100
|
|
|
29,000
|
|
||
6.43% note, due May 2, 2028
|
7,000
|
|
|
7,000
|
|
||
3.73% note, due December 16, 2028
|
20,000
|
|
|
20,000
|
|
||
3.88% note, due May 15, 2029
|
50,000
|
|
|
50,000
|
|
||
3.25% note, due April 30, 2032
|
70,000
|
|
|
—
|
|
||
Promissory notes
|
97
|
|
|
168
|
|
||
Capital lease obligation
|
2,070
|
|
|
3,471
|
|
||
Less: debt issuance costs
|
(433
|
)
|
|
(291
|
)
|
||
Total long-term debt
|
206,816
|
|
|
149,053
|
|
||
Less: current maturities
|
(9,421
|
)
|
|
(12,099
|
)
|
||
Total long-term debt, net of current maturities
|
$
|
197,395
|
|
|
$
|
136,954
|
|
|
|
|
|
Outstanding borrowings at
|
|
|||||||||
(in thousands)
|
Total Facility
|
Interest Rate
|
Expiration Date
|
December 31, 2017
|
December 31, 2016
|
Available at December 31, 2017
|
||||||||
Bank Credit Facility
|
|
|
|
|
|
|
||||||||
Committed revolving credit facility A
|
$
|
55,000
|
|
LIBOR plus 1.00 percent
(1)
|
October 28, 2018
|
$
|
55,000
|
|
$
|
45,000
|
|
$
|
—
|
|
Committed revolving credit facility B
|
30,000
|
|
LIBOR plus 1.00 percent
(1)
|
October 31, 2018
|
20,500
|
|
21,311
|
|
9,500
|
|
||||
Short-term revolving credit note C
|
50,000
|
|
LIBOR plus 0.80 percent
(2)
|
October 31, 2018
|
50,000
|
|
50,000
|
|
—
|
|
||||
Committed revolving credit facility D
|
45,000
|
|
LIBOR plus 0.85 percent
(3)
|
October 31, 2018
|
40,171
|
|
35,000
|
|
4,829
|
|
||||
Committed revolving credit facility E
|
40,000
|
|
LIBOR plus 0.85 percent
(3)
|
October 31, 2018
|
—
|
|
—
|
|
40,000
|
|
||||
Committed revolving credit facility F
(5)
|
150,000
|
|
LIBOR plus 1.00 percent
(1)
|
October 08, 2020
|
75,000
|
|
50,000
|
|
75,000
|
|
||||
Total short term credit facilities
|
$
|
370,000
|
|
|
|
$
|
240,671
|
|
$
|
201,311
|
|
$
|
129,329
|
|
Book overdrafts
(4)
|
|
|
|
10,298
|
|
8,560
|
|
|
||||||
Total short-term borrowing
|
|
|
|
$
|
250,969
|
|
$
|
209,871
|
|
|
|
|
Defined Benefit Pension and Postretirement Plan Items
|
|
Commodity Contract Cash Flow Hedges
|
|
Total
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
As of December 31, 2016
|
|
$
|
(5,360
|
)
|
|
$
|
482
|
|
|
$
|
(4,878
|
)
|
Other comprehensive income before reclassifications
|
|
281
|
|
|
159
|
|
|
440
|
|
|||
Amounts reclassified from accumulated other comprehensive income/(loss)
|
|
336
|
|
|
(170
|
)
|
|
166
|
|
|||
Net current-period other comprehensive income/(loss)
|
|
617
|
|
|
(11
|
)
|
|
606
|
|
|||
As of December 31, 2017
|
|
$
|
(4,743
|
)
|
|
$
|
471
|
|
|
$
|
(4,272
|
)
|
|
|
Defined Benefit Pension and Postretirement Plan Items
|
|
Commodity Contracts Cash Flow Hedges
|
|
Total
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
As of December 31, 2015
|
|
$
|
(5,580
|
)
|
|
$
|
(260
|
)
|
|
$
|
(5,840
|
)
|
Other comprehensive income/(loss) before reclassifications
|
|
(254
|
)
|
|
762
|
|
|
508
|
|
|||
Amounts reclassified from accumulated other comprehensive income/(loss)
|
|
474
|
|
|
(20
|
)
|
|
454
|
|
|||
Net current-period other comprehensive income
|
|
220
|
|
|
742
|
|
|
962
|
|
|||
As of December 31, 2016
|
|
$
|
(5,360
|
)
|
|
$
|
482
|
|
|
$
|
(4,878
|
)
|
|
|
For the Year Ended December 31,
|
||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Amortization of defined benefit pension and postretirement plan items:
|
|
|
|
|
|
|
||||||
Prior service cost
(1)
|
|
$
|
77
|
|
|
$
|
77
|
|
|
$
|
68
|
|
Net gain
(1)
|
|
(636
|
)
|
|
(871
|
)
|
|
(650
|
)
|
|||
Total before income taxes
|
|
(559
|
)
|
|
(794
|
)
|
|
(582
|
)
|
|||
Income tax benefit
|
|
223
|
|
|
320
|
|
|
233
|
|
|||
Net of tax
|
|
$
|
(336
|
)
|
|
$
|
(474
|
)
|
|
$
|
(349
|
)
|
|
|
|
|
|
|
|
||||||
Gains and losses on commodity contracts cash flow hedges
|
|
|
|
|
|
|
||||||
Propane swap agreements
(2)
|
|
$
|
1,607
|
|
|
$
|
(322
|
)
|
|
$
|
(120
|
)
|
Natural gas swaps
(2)
|
|
(822
|
)
|
|
—
|
|
|
(55
|
)
|
|||
Natural gas futures
(2)
|
|
(456
|
)
|
|
345
|
|
|
(31
|
)
|
|||
Total before income taxes
|
|
329
|
|
|
23
|
|
|
(206
|
)
|
|||
Income tax impact
|
|
(159
|
)
|
|
(3
|
)
|
|
83
|
|
|||
Net of tax
|
|
$
|
170
|
|
|
$
|
20
|
|
|
$
|
(123
|
)
|
|
|
|
|
|
|
|
||||||
Total reclassifications for the period
|
|
$
|
(166
|
)
|
|
$
|
(454
|
)
|
|
$
|
(472
|
)
|
(1)
|
These amounts are included in the computation of net periodic benefits. See Note 16
, Employee Benefit Plans
, for additional details.
|
(2)
|
These amounts are included in the effects of gains and losses from derivative instruments. See Note 7,
Derivative Instruments
, for additional details.
|
|
Chesapeake
Pension Plan
|
|
FPU
Pension Plan
|
||||||||||||
At December 31,
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
(in thousands)
|
|
|
|
|
|
|
|
||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation — beginning of year
|
$
|
11,355
|
|
|
$
|
11,501
|
|
|
$
|
63,832
|
|
|
$
|
64,435
|
|
Interest cost
|
402
|
|
|
421
|
|
|
2,482
|
|
|
2,525
|
|
||||
Actuarial loss (gain)
|
454
|
|
|
330
|
|
|
1,199
|
|
|
(216
|
)
|
||||
Effect of settlement
|
—
|
|
|
(433
|
)
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
(768
|
)
|
|
(464
|
)
|
|
(2,849
|
)
|
|
(2,912
|
)
|
||||
Benefit obligation — end of year
|
11,443
|
|
|
11,355
|
|
|
64,664
|
|
|
63,832
|
|
||||
Change in plan assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets — beginning of year
|
8,668
|
|
|
8,752
|
|
|
43,272
|
|
|
42,207
|
|
||||
Actual return on plan assets
|
1,144
|
|
|
424
|
|
|
6,025
|
|
|
2,343
|
|
||||
Employer contributions
|
306
|
|
|
389
|
|
|
1,948
|
|
|
1,634
|
|
||||
Benefits paid
|
(768
|
)
|
|
(464
|
)
|
|
(2,849
|
)
|
|
(2,912
|
)
|
||||
Effect of settlement
|
—
|
|
|
(433
|
)
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets — end of year
|
9,350
|
|
|
8,668
|
|
|
48,396
|
|
|
43,272
|
|
||||
Reconciliation:
|
|
|
|
|
|
|
|
||||||||
Funded status
|
(2,093
|
)
|
|
(2,687
|
)
|
|
(16,268
|
)
|
|
(20,560
|
)
|
||||
Accrued pension cost
|
$
|
(2,093
|
)
|
|
$
|
(2,687
|
)
|
|
$
|
(16,268
|
)
|
|
$
|
(20,560
|
)
|
Assumptions:
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
3.50
|
%
|
|
3.75
|
%
|
|
3.75
|
%
|
|
4.00
|
%
|
||||
Expected return on plan assets
|
6.00
|
%
|
|
6.00
|
%
|
|
6.50
|
%
|
|
6.50
|
%
|
|
Chesapeake
Pension Plan |
|
FPU
Pension Plan |
||||||||||||||||||||
For the Years Ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Components of net periodic pension cost:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest cost
|
$
|
402
|
|
|
$
|
421
|
|
|
$
|
407
|
|
|
$
|
2,482
|
|
|
$
|
2,525
|
|
|
$
|
2,504
|
|
Expected return on assets
|
(495
|
)
|
|
(501
|
)
|
|
(530
|
)
|
|
(2,779
|
)
|
|
(2,702
|
)
|
|
(3,107
|
)
|
||||||
Amortization of actuarial loss
|
399
|
|
|
459
|
|
|
392
|
|
|
513
|
|
|
519
|
|
|
456
|
|
||||||
Settlement expense
|
—
|
|
|
161
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic pension cost
|
306
|
|
|
540
|
|
|
269
|
|
|
216
|
|
|
342
|
|
|
(147
|
)
|
||||||
Amortization of pre-merger regulatory asset
|
—
|
|
|
—
|
|
|
—
|
|
|
761
|
|
|
761
|
|
|
761
|
|
||||||
Total periodic cost
|
$
|
306
|
|
|
$
|
540
|
|
|
$
|
269
|
|
|
$
|
977
|
|
|
$
|
1,103
|
|
|
$
|
614
|
|
Assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Discount rate
|
3.75
|
%
|
|
3.75
|
%
|
|
3.50
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
3.75
|
%
|
||||||
Expected return on plan assets
|
6.00
|
%
|
|
6.00
|
%
|
|
6.00
|
%
|
|
6.50
|
%
|
|
6.50
|
%
|
|
7.00
|
%
|
At December 31,
|
2017
|
|
2016
|
||||
(in thousands)
|
|
|
|
||||
Change in benefit obligation:
|
|
|
|
||||
Benefit obligation — beginning of year
|
$
|
2,428
|
|
|
$
|
2,510
|
|
Interest cost
|
89
|
|
|
91
|
|
||
Actuarial loss (gain)
|
63
|
|
|
(21
|
)
|
||
Benefits paid
|
(152
|
)
|
|
(152
|
)
|
||
Benefit obligation — end of year
|
2,428
|
|
|
2,428
|
|
||
Change in plan assets:
|
|
|
|
||||
Fair value of plan assets — beginning of year
|
—
|
|
|
—
|
|
||
Employer contributions
|
152
|
|
|
152
|
|
||
Benefits paid
|
(152
|
)
|
|
(152
|
)
|
||
Fair value of plan assets — end of year
|
—
|
|
|
—
|
|
||
Reconciliation:
|
|
|
|
||||
Funded status
|
(2,428
|
)
|
|
(2,428
|
)
|
||
Accrued pension cost
|
$
|
(2,428
|
)
|
|
$
|
(2,428
|
)
|
Assumptions:
|
|
|
|
||||
Discount rate
|
3.50
|
%
|
|
3.75
|
%
|
For the Years Ended December 31,
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Components of net periodic pension cost:
|
|
|
|
|
|
||||||
Interest cost
|
$
|
89
|
|
|
$
|
91
|
|
|
$
|
91
|
|
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
9
|
|
|||
Amortization of actuarial loss
|
87
|
|
|
87
|
|
|
99
|
|
|||
Net periodic pension cost
|
$
|
176
|
|
|
$
|
178
|
|
|
$
|
199
|
|
Assumptions:
|
|
|
|
|
|
||||||
Discount rate
|
3.75
|
%
|
|
3.75
|
%
|
|
3.50
|
%
|
|
Chesapeake
Pension Plan |
|
FPU
Pension Plan |
||||||||||||||
At December 31,
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||
Asset Category
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity securities
|
52.70
|
%
|
|
52.93
|
%
|
|
48.01
|
%
|
|
55.17
|
%
|
|
53.18
|
%
|
|
48.56
|
%
|
Debt securities
|
37.79
|
%
|
|
37.64
|
%
|
|
39.62
|
%
|
|
36.56
|
%
|
|
37.74
|
%
|
|
41.74
|
%
|
Other
|
9.51
|
%
|
|
9.43
|
%
|
|
12.37
|
%
|
|
8.27
|
%
|
|
9.08
|
%
|
|
9.70
|
%
|
Total
|
100.00
|
%
|
|
100.00
|
%
|
|
100.00
|
%
|
|
100.00
|
%
|
|
100.00
|
%
|
|
100.00
|
%
|
Asset Allocation Strategy
|
|||||
Asset Class
|
Minimum
Allocation Percentage |
|
Maximum
Allocation Percentage |
||
Domestic Equities (Large Cap, Mid Cap and Small Cap)
|
14
|
%
|
|
32
|
%
|
Foreign Equities (Developed and Emerging Markets)
|
13
|
%
|
|
25
|
%
|
Fixed Income (Inflation Bond and Taxable Fixed)
|
26
|
%
|
|
40
|
%
|
Alternative Strategies (Long/Short Equity and Hedge Fund of Funds)
|
6
|
%
|
|
14
|
%
|
Diversifying Assets (High Yield Fixed Income, Commodities, and Real Estate)
|
7
|
%
|
|
19
|
%
|
Cash
|
0
|
%
|
|
5
|
%
|
|
Fair Value Measurement Hierarchy
|
||||||||||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||||||
|
At December 31, 2017
|
|
At December 31, 2016
|
||||||||||||||||||||||||||||
Asset Category
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Mutual Funds - Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Large Cap
(1)
|
$
|
4,245
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,245
|
|
|
$
|
4,031
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,031
|
|
U.S. Mid Cap
(1)
|
1,775
|
|
|
—
|
|
|
—
|
|
|
1,775
|
|
|
1,677
|
|
|
—
|
|
|
—
|
|
|
1,677
|
|
||||||||
U.S. Small Cap
(1)
|
918
|
|
|
—
|
|
|
—
|
|
|
918
|
|
|
845
|
|
|
—
|
|
|
—
|
|
|
845
|
|
||||||||
International
(2)
|
11,916
|
|
|
—
|
|
|
—
|
|
|
11,916
|
|
|
9,574
|
|
|
—
|
|
|
—
|
|
|
9,574
|
|
||||||||
Alternative Strategies
(3)
|
5,528
|
|
|
—
|
|
|
—
|
|
|
5,528
|
|
|
5,238
|
|
|
—
|
|
|
—
|
|
|
5,238
|
|
||||||||
|
24,382
|
|
|
—
|
|
|
—
|
|
|
24,382
|
|
|
21,365
|
|
|
—
|
|
|
—
|
|
|
21,365
|
|
||||||||
Mutual Funds - Debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Fixed income
(4)
|
18,454
|
|
|
—
|
|
|
—
|
|
|
18,454
|
|
|
16,958
|
|
|
—
|
|
|
—
|
|
|
16,958
|
|
||||||||
High Yield
(4)
|
2,772
|
|
|
—
|
|
|
—
|
|
|
2,772
|
|
|
2,636
|
|
|
—
|
|
|
—
|
|
|
2,636
|
|
||||||||
|
21,226
|
|
|
—
|
|
|
—
|
|
|
21,226
|
|
|
19,594
|
|
|
—
|
|
|
—
|
|
|
19,594
|
|
||||||||
Mutual Funds - Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commodities
(5)
|
2,154
|
|
|
—
|
|
|
—
|
|
|
2,154
|
|
|
2,134
|
|
|
—
|
|
|
—
|
|
|
2,134
|
|
||||||||
Real Estate
(6)
|
2,300
|
|
|
—
|
|
|
—
|
|
|
2,300
|
|
|
2,116
|
|
|
—
|
|
|
—
|
|
|
2,116
|
|
||||||||
Guaranteed deposit
(7)
|
—
|
|
|
—
|
|
|
436
|
|
|
436
|
|
|
—
|
|
|
—
|
|
|
498
|
|
|
498
|
|
||||||||
|
4,454
|
|
|
—
|
|
|
436
|
|
|
4,890
|
|
|
4,250
|
|
|
—
|
|
|
498
|
|
|
4,748
|
|
||||||||
Total Pension Plan Assets in fair value hierarchy
|
$
|
50,062
|
|
|
$
|
—
|
|
|
$
|
436
|
|
|
50,498
|
|
|
$
|
45,209
|
|
|
$
|
—
|
|
|
$
|
498
|
|
|
45,707
|
|
||
Investments measured at net asset value
(8)
|
|
|
|
|
|
|
7,248
|
|
|
|
|
|
|
|
|
6,233
|
|
||||||||||||||
Total Pension Plan Assets
|
|
|
|
|
|
|
$
|
57,746
|
|
|
|
|
|
|
|
|
$
|
51,940
|
|
(1)
|
Includes funds that invest primarily in United States common stocks.
|
(2)
|
Includes funds that invest primarily in foreign equities and emerging markets equities.
|
(3)
|
Includes funds that actively invest in both equity and debt securities, funds that sell short securities and funds that provide long-term capital appreciation. The funds may invest in debt securities below investment grade.
|
(4)
|
Includes funds that invest in investment grade and fixed income securities.
|
(5)
|
Includes funds that invest primarily in commodity-linked derivative instruments and fixed income securities.
|
(6)
|
Includes funds that invest primarily in real estate.
|
(7)
|
Includes investment in a group annuity product issued by an insurance company.
|
(8)
|
Certain investments that were measured at net asset value per share have not been classified in the fair value hierarchy. These amounts are presented to reconcile to total pension plan assets.
|
|
For the Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
(in thousands)
|
|
|
|
||||
Balance, beginning of year
|
$
|
498
|
|
|
$
|
1,286
|
|
Purchases
|
2,271
|
|
|
2,023
|
|
||
Transfers in
|
1,743
|
|
|
1,435
|
|
||
Disbursements
|
(4,101
|
)
|
|
(4,268
|
)
|
||
Investment income
|
25
|
|
|
22
|
|
||
Balance, end of year
|
$
|
436
|
|
|
$
|
498
|
|
|
Chesapeake
Postretirement Plan |
|
FPU
Medical Plan |
||||||||||||
At December 31,
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
(in thousands)
|
|
|
|
|
|
|
|
||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation — beginning of year
|
$
|
1,132
|
|
|
$
|
1,153
|
|
|
$
|
1,349
|
|
|
$
|
1,444
|
|
Interest cost
|
41
|
|
|
43
|
|
|
50
|
|
|
55
|
|
||||
Plan participants contributions
|
118
|
|
|
90
|
|
|
48
|
|
|
64
|
|
||||
Actuarial loss (gain)
|
72
|
|
|
20
|
|
|
(48
|
)
|
|
(41
|
)
|
||||
Benefits paid
|
(235
|
)
|
|
(174
|
)
|
|
(112
|
)
|
|
(173
|
)
|
||||
Benefit obligation — end of year
|
1,128
|
|
|
1,132
|
|
|
1,287
|
|
|
1,349
|
|
||||
Change in plan assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets — beginning of year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
(1)
|
117
|
|
|
84
|
|
|
64
|
|
|
109
|
|
||||
Plan participants contributions
|
118
|
|
|
90
|
|
|
48
|
|
|
64
|
|
||||
Benefits paid
|
(235
|
)
|
|
(174
|
)
|
|
(112
|
)
|
|
(173
|
)
|
||||
Fair value of plan assets — end of year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Reconciliation:
|
|
|
|
|
|
|
|
||||||||
Funded status
|
(1,128
|
)
|
|
(1,132
|
)
|
|
(1,287
|
)
|
|
(1,349
|
)
|
||||
Accrued postretirement cost
|
$
|
(1,128
|
)
|
|
$
|
(1,132
|
)
|
|
$
|
(1,287
|
)
|
|
$
|
(1,349
|
)
|
Assumptions:
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
3.50
|
%
|
|
3.75
|
%
|
|
3.75
|
%
|
|
4.00
|
%
|
(1)
|
The Chesapeake Postretirement Plan does not receive a Medicare Part-D subsidy. The FPU Medical Plan did not receive a significant subsidy for the post-merger period.
|
|
Chesapeake
Postretirement Plan |
|
FPU
Medical Plan |
||||||||||||||||||||
For the Years Ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Components of net periodic postretirement cost:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest cost
|
$
|
41
|
|
|
$
|
43
|
|
|
$
|
42
|
|
|
$
|
50
|
|
|
$
|
55
|
|
|
$
|
57
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Actuarial loss
|
53
|
|
|
64
|
|
|
72
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Prior service cost
|
(77
|
)
|
|
(77
|
)
|
|
(77
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic cost
|
17
|
|
|
30
|
|
|
37
|
|
|
50
|
|
|
55
|
|
|
57
|
|
||||||
Amortization of pre-merger regulatory asset
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
|
8
|
|
||||||
Net periodic cost
|
$
|
17
|
|
|
$
|
30
|
|
|
$
|
37
|
|
|
$
|
58
|
|
|
$
|
63
|
|
|
$
|
65
|
|
Assumptions
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Discount rate
|
3.75
|
%
|
|
3.75
|
%
|
|
3.50
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
3.75
|
%
|
(in thousands)
|
Chesapeake
Pension
Plan
|
|
FPU
Pension
Plan
|
|
Chesapeake
SERP
|
|
Chesapeake
Postretirement
Plan
|
|
FPU
Medical
Plan
|
|
Total
|
||||||||||||
Prior service cost (credit)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(601
|
)
|
|
$
|
—
|
|
|
$
|
(601
|
)
|
Net loss
|
3,629
|
|
|
17,483
|
|
|
733
|
|
|
767
|
|
|
10
|
|
|
22,622
|
|
||||||
Total
|
$
|
3,629
|
|
|
$
|
17,483
|
|
|
$
|
733
|
|
|
$
|
166
|
|
|
$
|
10
|
|
|
$
|
22,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accumulated other comprehensive loss pre-tax
(1)
|
$
|
3,629
|
|
|
$
|
3,322
|
|
|
$
|
733
|
|
|
$
|
166
|
|
|
$
|
2
|
|
|
$
|
7,852
|
|
Post-merger regulatory asset
|
—
|
|
|
14,161
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
14,169
|
|
||||||
Subtotal
|
3,629
|
|
|
17,483
|
|
|
733
|
|
|
166
|
|
|
10
|
|
|
22,021
|
|
||||||
Pre-merger regulatory asset
|
—
|
|
|
1,304
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
1,326
|
|
||||||
Total unrecognized cost
|
$
|
3,629
|
|
|
$
|
18,787
|
|
|
$
|
733
|
|
|
$
|
166
|
|
|
$
|
32
|
|
|
$
|
23,347
|
|
(1)
|
The total amount of accumulated other comprehensive loss recorded on our consolidated balance sheet as of
December 31, 2017
is net of income tax benefits of
$3.1 million
.
|
(in thousands)
|
Chesapeake
Pension
Plan
|
|
FPU
Pension
Plan
|
|
Chesapeake
SERP
|
|
Chesapeake
Postretirement
Plan
|
|
FPU
Medical
Plan
|
|
Total
|
||||||||||||
Prior service cost (credit)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(77
|
)
|
|
$
|
—
|
|
|
$
|
(77
|
)
|
Net loss
|
$
|
351
|
|
|
$
|
434
|
|
|
$
|
101
|
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
944
|
|
Amortization of pre-merger regulatory asset
|
$
|
—
|
|
|
$
|
761
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
769
|
|
|
Chesapeake Pension
Plan
(1)
|
|
FPU Pension
Plan
(1)
|
|
Chesapeake
SERP
(2)
|
|
Chesapeake
Postretirement
Plan
(2)
|
|
FPU
Medical
Plan
(2)
|
||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
||||||||||
2018
|
$
|
687
|
|
|
$
|
3,078
|
|
|
$
|
151
|
|
|
$
|
97
|
|
|
$
|
88
|
|
2019
|
$
|
490
|
|
|
$
|
3,207
|
|
|
$
|
150
|
|
|
$
|
96
|
|
|
$
|
94
|
|
2020
|
$
|
675
|
|
|
$
|
3,304
|
|
|
$
|
149
|
|
|
$
|
85
|
|
|
$
|
87
|
|
2021
|
$
|
779
|
|
|
$
|
3,362
|
|
|
$
|
385
|
|
|
$
|
82
|
|
|
$
|
91
|
|
2022
|
$
|
592
|
|
|
$
|
3,536
|
|
|
$
|
146
|
|
|
$
|
81
|
|
|
$
|
93
|
|
Years 2023 through 2027
|
$
|
5,278
|
|
|
$
|
18,608
|
|
|
$
|
738
|
|
|
$
|
290
|
|
|
$
|
404
|
|
(1)
|
The pension plan is funded; therefore, benefit payments are expected to be paid out of the plan assets.
|
(2)
|
Benefit payments are expected to be paid out of our general funds.
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
||||||
Awards to non-employee directors
|
$
|
540
|
|
|
$
|
580
|
|
|
$
|
640
|
|
Awards to key employees
|
1,950
|
|
|
1,787
|
|
|
1,297
|
|
|||
Total compensation expense
|
2,490
|
|
|
2,367
|
|
|
1,937
|
|
|||
Less: tax benefit
|
(1,003
|
)
|
|
(952
|
)
|
|
(780
|
)
|
|||
Share-based compensation amounts included in net income
|
$
|
1,487
|
|
|
$
|
1,415
|
|
|
$
|
1,157
|
|
|
Number of
Shares
|
|
Weighted Average
Grant Date Fair Value
|
|||
Outstanding — December 31, 2015
|
—
|
|
|
$
|
—
|
|
Granted
|
8,577
|
|
|
$
|
62.90
|
|
Vested
|
(8,577
|
)
|
|
$
|
62.90
|
|
Outstanding — December 31, 2016
|
—
|
|
|
$
|
—
|
|
Granted
|
7,515
|
|
|
$
|
71.80
|
|
Vested
|
(7,515
|
)
|
|
$
|
71.80
|
|
Outstanding — December 31, 2017
|
—
|
|
|
$
|
—
|
|
|
Number of
Shares
|
|
Weighted Average
Fair Value
|
|||
Outstanding — December 31, 2015
|
110,398
|
|
|
$
|
38.34
|
|
Granted
|
46,571
|
|
|
$
|
67.90
|
|
Vested
|
(39,553
|
)
|
|
$
|
31.79
|
|
Expired
|
(2,325
|
)
|
|
$
|
42.25
|
|
Outstanding — December 31, 2016
|
115,091
|
|
|
$
|
51.85
|
|
Granted
|
52,355
|
|
|
$
|
63.42
|
|
Vested
|
(32,926
|
)
|
|
$
|
38.88
|
|
Expired
|
(1,878
|
)
|
|
$
|
39.97
|
|
Outstanding — December 31, 2017
|
132,642
|
|
|
$
|
53.00
|
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
(in thousands)
|
|
|
|
||||
Regulatory Assets
|
|
|
|
||||
Under-recovered purchased fuel and conservation cost recovery
(1)
|
$
|
9,869
|
|
|
$
|
5,703
|
|
Under-recovered GRIP revenue
(2)
|
164
|
|
|
1,469
|
|
||
Deferred postretirement benefits
(3)
|
15,498
|
|
|
18,379
|
|
||
Deferred conversion and development costs
(1)
|
11,735
|
|
|
8,051
|
|
||
Environmental regulatory assets and expenditures
(4)
|
3,222
|
|
|
3,694
|
|
||
Acquisition adjustment
(5)
|
39,992
|
|
|
41,864
|
|
||
Loss on reacquired debt
(6)
|
1,031
|
|
|
1,145
|
|
||
Other
|
4,994
|
|
|
4,192
|
|
||
Total Regulatory Assets
|
$
|
86,505
|
|
|
$
|
84,497
|
|
|
|
|
|
||||
|
|
|
|
||||
Regulatory Liabilities
|
|
|
|
||||
Self-insurance
(7)
|
$
|
1,013
|
|
|
$
|
987
|
|
Over-recovered purchased fuel and conservation cost recovery
(1)
|
2,048
|
|
|
808
|
|
||
Under-recovered GRIP revenue
(2)
|
2,245
|
|
|
—
|
|
||
Storm reserve
(7)
|
669
|
|
|
2,310
|
|
||
Accrued asset removal cost
(8)
|
40,948
|
|
|
39,826
|
|
||
Deferred income taxes due to rate change
(9)
|
98,492
|
|
|
—
|
|
||
Other
|
2,048
|
|
|
424
|
|
||
Total Regulatory Liabilities
|
$
|
147,463
|
|
|
$
|
44,355
|
|
|
|
|
|
(1)
|
We are allowed to recover the asset or are required to pay the liability in rates. We do not earn an overall rate of return on these assets.
|
(2)
|
The Florida PSC allowed us to recover through a surcharge, capital and other program-related-costs, inclusive of an appropriate return on investment, associated with accelerating the replacement of qualifying distribution mains and services (defined as any material other than coated steel or plastic) in FPU’s natural gas distribution, Fort Meade and Chesapeake Utilities’ Florida Division. We are allowed to recover the asset or are required to pay the liability in rates related to GRIP.
|
(3)
|
The Florida PSC allowed FPU to treat as a regulatory asset the portion of the unrecognized costs pursuant to ASC Topic 715
, Compensation - Retirement Benefits
, related to its regulated operations. See Note 16
, Employee Benefit Plans,
for additional information.
|
(4)
|
All of our environmental expenditures incurred to date and our current estimate of future environmental expenditures have been approved by various PSCs for recovery. See Note 19
, Environmental Commitments and Contingencies
, for additional information on our environmental contingencies.
|
(5)
|
We are allowed to include the premiums paid in various natural gas utility acquisitions in Florida in our rate bases and recover them over a specific time period pursuant to the Florida PSC approvals. Included in these amounts are
$1.3 million
of the premium paid by FPU,
$34.2 million
of the premium paid by us in 2009, including the gross up of the amount for income tax, because it is not tax deductible, and
$746,000
of the premium paid by FPU in 2010.
|
(6)
|
Gains and losses resulting from the reacquisition of long-term debt are amortized over future periods as adjustments to interest expense in accordance with established regulatory practice.
|
(7)
|
We have self-insurance and storm reserves in our Florida regulated energy operations that allow us to collect through rates amounts to be used against general claims, storm restoration costs and other losses as they are incurred.
|
(8)
|
See Note 1
, Summary of Significant Accounting Policies,
for additional information on our asset removal cost policies.
|
(9)
|
We recorded a regulatory liability for our regulated businesses related to the revaluation of accumulated deferred tax assets/liabilities as a result of the TCJA. Based upon the regulatory proceedings, we will pass back the respective portion of the excess accumulated deferred taxes to rate payers. See Note 11,
Income Taxes
, for additional information.
|
Jurisdiction
|
MGP Site
|
Status
|
Cost to Clean up
|
Recovery through Rates
|
Florida
|
West Palm Beach
|
Remedial actions approved by FDEP have been implemented on the east parcel of the site. Similar remedial actions expected to be implemented on other remaining portions.
|
Between $4.5 million to $15.4 million, including costs associated with the relocation of FPU’s operations at this site, which is necessary to implement the remedial plan, and any potential costs associated with future redevelopment of the properties.
|
Yes
|
Florida
|
Sanford
|
In January 2007, FPU and the Sanford group signed a Third Participation Agreement. FPU's share of remediation costs under the Third Participation Agreement is set at five percent of a maximum of $13.0 million, or $650,000, which has been paid to an escrow account.
The EPA issued a preliminary close-out report in December 2014. Groundwater monitoring and statutory five-year reviews to ensure performance of the approved remedy will continue on this site.
|
FPU's remaining remediation expenses, including attorneys' fees and costs, are estimated to be approximately $24,000.
|
Yes
|
Florida
|
Winter Haven
|
Remediation is ongoing.
|
Not expected to exceed $425,000, which includes costs of implementing institutional controls at the site.
|
Yes
|
Delaware
|
Seaford
|
Proposed plan for implementation approved by DNREC in July 2017.
|
$273,000 to $465,000.
|
Yes
|
Maryland
|
Cambridge
|
Currently in discussions with MDE.
|
Unable to estimate.
|
N/A
|
|
For the Quarters Ended
|
||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
(in thousands except per share amounts)
|
|
|
|
|
|
|
|
||||||||
2017
(1)
|
|
|
|
|
|
|
|
||||||||
Operating Revenues
|
$
|
185,160
|
|
|
$
|
125,084
|
|
|
$
|
126,936
|
|
|
$
|
180,403
|
|
Operating Income
|
$
|
34,676
|
|
|
$
|
13,666
|
|
|
$
|
14,239
|
|
|
$
|
23,263
|
|
Net Income
|
$
|
19,144
|
|
|
$
|
6,046
|
|
|
$
|
6,833
|
|
|
$
|
26,101
|
|
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.17
|
|
|
$
|
0.37
|
|
|
$
|
0.42
|
|
|
$
|
1.60
|
|
Diluted
|
$
|
1.17
|
|
|
$
|
0.37
|
|
|
$
|
0.42
|
|
|
$
|
1.59
|
|
|
|
|
|
|
|
|
|
||||||||
2016
(1)
|
|
|
|
|
|
|
|
||||||||
Operating Revenues
|
$
|
146,296
|
|
|
$
|
102,342
|
|
|
$
|
108,348
|
|
|
$
|
141,874
|
|
Operating Income
|
$
|
36,380
|
|
|
$
|
15,742
|
|
|
$
|
10,156
|
|
|
$
|
21,819
|
|
Net Income
|
$
|
20,367
|
|
|
$
|
8,029
|
|
|
$
|
4,416
|
|
|
$
|
11,863
|
|
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.33
|
|
|
$
|
0.52
|
|
|
$
|
0.29
|
|
|
$
|
0.73
|
|
Diluted
|
$
|
1.33
|
|
|
$
|
0.52
|
|
|
$
|
0.29
|
|
|
$
|
0.73
|
|
(1)
|
The sum of the four quarters does not equal the total year due to rounding.
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
• Exhibit 4.3
|
|
Note Agreement dated October 31, 2008, among Chesapeake Utilities Corporation, as issuer, General American Life Insurance Company and New England Life Insurance Company, relating to the private placement of Chesapeake Utilities Corporation's 5.93% Senior Notes due 2023.†
|
|
|
|
• Exhibit 4.4
|
|
Note Agreement dated June 29, 2010, among Chesapeake Utilities Corporation, as issuer, Metropolitan Life Insurance Company and New England Life Insurance Company, relating to the private placement of Chesapeake Utilities Corporation’s 5.68% Senior Notes due 2026 and Chesapeake Utilities Corporation’s 6.43% Senior Notes due 2028.†
|
|
|
|
• Exhibit 4.5
|
|
Note Agreement dated September 5, 2013, among Chesapeake Utilities Corporation, as issuer, and certain note holders, relating to the private placement of Chesapeake Utilities Corporation’s 3.73% Senior Notes due 2028 and Chesapeake Utilities Corporation’s 3.88% Senior Notes due 2029.†
|
|
|
|
• Exhibit 4.6
|
|
Form of Indenture of Mortgage and Deed of Trust dated September 1, 1942, between Florida Public Utilities Company and the trustee, for the First Mortgage Bonds, is incorporated herein by reference to Exhibit 7-A of Florida Public Utilities Company’s Registration No. 2-6087.
|
|
|
|
|
||
|
|
|
|
||
|
|
|
• Exhibit 4.9
|
|
Thirteenth Supplemental Indenture dated June 1, 1992, pursuant to which Florida Public Utilities, on May 1, 1992, privately placed $8,000,000 of its 9.08% First Mortgage Bonds, is incorporated herein by reference to Exhibit 4 to Florida Public Utilities Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1992.
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
||
• Exhibit 101.INS XBRL Instance Document is filed herewith.
|
||
|
||
• Exhibit 101.SCH XBRL Taxonomy Extension Schema Document is filed herewith.
|
||
|
||
• Exhibit 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document is filed herewith.
|
||
|
||
• Exhibit 101.DEF XBRL Taxonomy Extension Definition Linkbase Document is filed herewith.
|
||
|
||
• Exhibit 101.LAB XBRL Taxonomy Extension Label Linkbase Document is filed herewith.
|
||
|
||
• Exhibit 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document is filed herewith.
|
*
|
Management contract or compensatory plan or agreement.
|
†
|
These agreements have not been filed herewith pursuant to Item 601(b)(4)(v) of Regulation S-K under the Securities Act of 1933, as amended. We hereby agree to furnish copies to the SEC upon request.
|
|
C
HESAPEAKE
U
TILITIES
C
ORPORATION
|
||
|
|
|
|
|
By:
|
|
/s/ M
ICHAEL
P. M
C
M
ASTERS
|
|
|
|
Michael P. McMasters,
|
|
|
|
President and Chief Executive Officer
|
|
|
|
February 28, 2018
|
/
S
/ M
ICHAEL
P. M
C
M
ASTERS
|
|
|
/
S
/ B
ETH
W. C
OOPER
|
Michael P. McMasters,
|
|
|
Beth W. Cooper, Senior Vice President
|
President, Chief Executive Officer and Director
|
|
|
and Chief Financial Officer
|
February 28, 2018
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
February 28, 2018
|
|
|
|
|
/
S
/ J
OHN
R. S
CHIMKAITIS
|
|
|
/
S
/ R
ONALD
G. F
ORSYTHE
, J
R
.
|
John R. Schimkaitis
|
|
|
Dr. Ronald G. Forsythe, Jr., Director
|
Chair of the Board and Director
|
|
|
February 28, 2018
|
February 28, 2018
|
|
|
|
|
|
|
|
/
S
/ E
UGENE
H. B
AYARD
, E
SQ
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/
S
/ D
ENNIS
S. H
UDSON
, III
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Eugene H. Bayard, Esq., Director
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Dennis S. Hudson, III, Director
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February 28, 2018
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February 28, 2018
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/
S
/ T
HOMAS
J. B
RESNAN
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S
/ D
IANNA
F. M
ORGAN
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Thomas J. Bresnan, Director
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Dianna F. Morgan, Director
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February 28, 2018
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February 28, 2018
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/
S
/ T
HOMAS
P. H
ILL
, J
R
.
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/
S
/ C
ALVERT
A. M
ORGAN
, JR.
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Thomas P. Hill, Jr., Director
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Calvert A. Morgan, Jr., Director
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February 28, 2018
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February 28, 2018
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/
S
/ P
AUL
L. M
ADDOCK
, J
R
.
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Paul L. Maddock, Jr., Director
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February 28, 2018
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Additions
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For the Year Ended December 31,
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Balance at
Beginning of
Year
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Charged to
Income
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Other
Accounts
(1)
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Deductions
(2)
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Balance at End
of Year
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||||||||||
(In thousands)
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||||||||||
Reserve Deducted From Related Assets
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Reserve for Uncollectible Accounts
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2017
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$
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909
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$
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602
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$
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337
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$
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(912
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)
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$
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936
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2016
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$
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909
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$
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985
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$
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340
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$
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(1,325
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)
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$
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909
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2015
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$
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1,120
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$
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979
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$
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246
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$
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(1,436
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)
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$
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909
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(1)
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Recoveries.
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(2)
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Uncollectible accounts charged off.
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For the Year Ended December 31,
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||||||||||||||||
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2017
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2016
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2015
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2014
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2013
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(in thousands, except ratio of earnings to fixed charges)
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Income from continuing operations
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$
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58,124
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$
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44,675
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41,140
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36,092
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$
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32,787
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Add:
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Income taxes
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14,309
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28,341
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26,905
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23,945
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22,085
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Portion of rents representative of interest factor
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1,216
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843
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565
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588
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542
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Interest on indebtedness
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12,474
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10,477
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9,933
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9,439
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8,202
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Amortization of debt discount and expense
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171
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162
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74
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42
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33
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Capitalized interest (allowed funds used during construction)
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632
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387
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38
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58
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131
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Earnings as adjusted
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$
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86,926
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$
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84,885
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78,655
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70,164
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$
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63,780
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Fixed Charges
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Portion of rents representative of interest factor
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$
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1,216
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$
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843
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565
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588
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$
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542
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Interest on indebtedness
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12,474
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10,477
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9,933
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9,439
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8,202
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Amortization of debt discount and expense
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171
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162
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74
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42
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33
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Capitalized interest (allowed funds used during construction)
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632
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387
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38
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58
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131
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Fixed Charges
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$
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14,493
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$
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11,869
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10,610
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10,127
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$
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8,908
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Ratio of Earnings to Fixed Charges
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6.00
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7.15
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7.41
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6.93
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7.16
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Subsidiaries
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State Incorporated
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Eastern Shore Natural Gas Company
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Delaware
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Sharp Energy, Inc.
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Delaware
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Chesapeake Service Company
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Delaware
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Xeron, Inc.
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Mississippi
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Chesapeake OnSight Services, LLC
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Delaware
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Peninsula Energy Services Company, Inc.
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Delaware
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Peninsula Pipeline Company, Inc.
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Delaware
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Florida Public Utilities Company
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Florida
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Sandpiper Energy, Inc.
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Delaware
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Grove Energy, Inc.
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Delaware
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Austin Cox Home Services, Inc.
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Delaware
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Aspire Energy of Ohio, LLC
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Delaware
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Aspire Energy, LLC
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Florida
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Aspire Energy Express, LLC
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Delaware
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Subsidiary of Sharp Energy, Inc.
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State Incorporated
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Sharpgas, Inc.
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Delaware
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Subsidiary of Florida Public Utilities Company
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State Incorporated
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Flo-Gas Corporation
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Florida
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Subsidiaries of Chesapeake Service Company
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State Incorporated
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Skipjack, Inc.
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Delaware
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Chesapeake Investment Company
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Delaware
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Eastern Shore Real Estate, Inc.
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Delaware
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Subsidiary of Chesapeake OnSight Services, LLC
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State Incorporated
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Eight Flags Energy, LLC
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Delaware
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C
ONSENT
OF
I
NDEPENDENT
R
EGISTERED
P
UBLIC
A
CCOUNTING
F
IRM
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/s/ Baker Tilly Virchow Krause, LLP
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Philadelphia, Pennsylvania
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February 28, 2018
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1.
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I have reviewed this annual report on Form 10-K for the year ended
December 31, 2017
of Chesapeake Utilities Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/
S
/ M
ICHAEL
P. M
C
M
ASTERS
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Michael P. McMasters
President and Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K for the year ended
December 31, 2017
of Chesapeake Utilities Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/
S
/ B
ETH
W. C
OOPER
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Beth W. Cooper
Senior Vice President and Chief Financial Officer
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/
S
/ M
ICHAEL
P. M
C
M
ASTERS
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Michael P. McMasters
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February 28, 2018
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/
S
/ B
ETH
W. C
OOPER
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Beth W. Cooper
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February 28, 2018
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