Chesapeake Utilities (CPK) Q2 FY26 earnings call: guidance and Q&A

Could you provide details on the regulatory and permitting process for FEP, the commercial interest, potential for upsizing, and how this project fits into the broader guidance update?

Management clarified that FEP is an intrastate pipeline project under Florida PSC jurisdiction, largely utilizing public right-of-way, which should facilitate permitting. They are actively pursuing additional load opportunities beyond the initial commitments and expect FEP to be a significant component of the February 2027 guidance update, with more details on partnership and financing anticipated soon.

“This is an intrastate pipeline project. operating under primarily our Peninsula Pipeline company. It is jurisdictional to the Florida Public Service Commission.”

asked by Constantine Lednev · answered by Jeffrey Householder

What is driving the rationale for a partnership structure for FEP, and how is this contemplated within the funding plan?

The partnership aims to balance the risk associated with such a large investment and manage its impact on the company's earnings profile during the construction phase until revenue generation in 2030. It also ensures the company retains capacity for other meaningful projects in its service areas.

“part of that for us is trying to maintain a reasonable balance on the risk associated with any investment of this size. Good to share some of those risks with a partner.”

asked by Constantine Lednev · answered by Jeffrey Householder

Is there common ground for a settlement in the Florida City Gas rate case?

Management hopes for a settlement but noted that the Office of Public Counsel has taken an opposing position. They are prepared to fully litigate the case if a settlement cannot be reached.

“I don't know that we will get to a settlement on this particular filing, and we're certainly prepared to fully litigate it if we need to.”

asked by Michael Brown · answered by Jeffrey Householder

Could you share some background on how long FEP has been evaluated and what prompted its current scale and timing?

Jeff Householder explained that capacity shortfalls in South Florida were recognized as early as the mid-1990s. The acquisition of Florida City Gas provided a direct opportunity to address these issues. The Phase IX expansion on FGT and collaboration with Florida Gas Transmission and Florida Power & Light were crucial in bringing the project to fruition, aiming to improve service reliability and meet growing demand.

“Back in the mid-'90s, I actually worked for NUI that owned Florida City Gas. And we recognized at that time, and I'm not kidding, recognized at that time that we had significant capacity shortfalls into the South Florida area.”

asked by Tate Sullivan · answered by Jeffrey Householder

Is regulatory approval for expansion of the WRU project a given, considering required peaking and redundancy needs?

Management believes the need for expansion is strong due to continuous and substantial customer growth on the Delmarva Peninsula, particularly from health services. LNG facilities are currently the most efficient and least expensive way to meet this demand. While not a 'given,' a very solid case can be made for future expansion.

“I'd like to think that it's a given. I never assume that. But I mean the need is certainly there. The demand from the customers and the growth in service connections on the Delmarva Peninsula is substantial”

asked by Tate Sullivan · answered by Jeffrey Householder

Can you provide an update on the Accomack County Exploration project in Virginia and the Canaveral LNG facility?

For Accomack County, the feasibility study and preliminary engineering are underway, supported by a state grant, to expand natural gas service towards Wallops Island. For Canaveral, the company has identified a promising waterside property for an LNG facility to fuel space programs and cruise ships, continuing aggressive efforts to secure the site and advance the project.

“We have an opportunity to look at another piece of property that's water side that I think might have some real opportunities for us.”

asked by Christopher Ellinghaus · answered by Jeffrey Householder

There's a palpable slowdown in customer growth across the U.S. What are you seeing in your regions regarding customer growth and any related headwinds?

Management acknowledged a general slowdown but emphasized that their service territories still exhibit above-average growth. Delmarva's growth rate is double the national average, and Florida remains healthy. They are closely monitoring lot inventories and construction activity, noting continued strong customer interest in connecting to their gas systems despite the slight moderation from peak levels.

“I think there is a general slowdown, but it's still going pretty quickly for us in the service territories that we're in.”

asked by Christopher Ellinghaus · answered by Jeffrey Householder

Given the lumpiness of the FEP project, how will you approach providing a long-term EPS growth rate, perhaps indicating a growth rate through completion and then a more normalized rate?

Management confirmed that FEP will impact the five-year cycle, extending through 2030 or 2031. While they haven't finalized the exact presentation, they expect to provide visibility across the entire five-year period and will consider how to bridge the early years of that plan.

“I'm not sure we've settled on exactly how to tell that story yet, but you can expect at least some visibility across the five years.”

asked by Paul Fremont · answered by Jeffrey Householder