Chesapeake Utilities Q3 EPS rises 9% as capex reaches $151 million

By Marcus Bennett

Chesapeake Utilities reported adjusted third-quarter 2026 earnings per share (EPS) of $0.89, up 9% year over year, as natural gas infrastructure, customer growth and Florida interim rates offset higher costs. Project execution, regulatory recovery and financing now stand alongside earnings growth as the company's main financial priorities.

Adjusted net income rose 11% to approximately $22 million, while adjusted gross margin, or revenue remaining after direct operating costs, increased 9% to about $149 million, Chief Financial Officer Jeff Sylvester said. "Natural gas transmission expansion projects, rate increases and infrastructure programs contributed to third-quarter earnings growth," Sylvester said.

For the first nine months of 2026, adjusted net income rose 12% and adjusted EPS increased 8% from the same period in 2025, Chair, President and CEO Jeff Householder said. Higher payroll and benefit costs, operations and maintenance, depreciation and financing costs partly offset those gains.

What does the capital program change?

Chesapeake spent $151 million on capital expenditure (capex) in the third quarter, taking spending through September to $413 million. It reaffirmed 2026 capex guidance of $550 million to $600 million, a range raised by $100 million last quarter, and expects spending under the current five-year program to exceed $2.2 billion.

The spending commitment makes permitting, construction milestones, regulatory recovery and debt terms the main operational watchpoints for practitioners tracking Chesapeake. These priorities extend beyond the current reporting period and will shape returns from the company's infrastructure portfolio.

Can the Florida pipeline expand?

Householder said Chesapeake still expects its $1.2 billion Florida Energy Pathway gas transmission project to enter service in 2030. NextEra Energy Resources was named as a joint venture partner: Chesapeake's PPC unit will retain 51%, while NextEra will acquire 49%.

Florida Power & Light, Florida Public Utilities and Florida City Gas have contracted for capacity totaling 250,000 dekatherms per day, a measure of daily gas-energy flow. Permitting should take 12 to 18 months, with construction beginning afterward.

Householder said the pipeline could ultimately expand capacity through compression, or added pumping capability, without substantial additional capital or much additional pipe. Data centers were not a key consideration in the project's design or future load expectations, he said. The initial build therefore remains anchored in contracted shipper demand, not data-center assumptions.

What will the storage upgrade contribute?

At the Worcester Resiliency Upgrade liquefied natural gas (LNG) storage facility in Maryland, mechanical and electrical construction is essentially complete, and pre-commissioning, or initial systems testing, is underway. Chesapeake raised expected project cost from $100 million to approximately $125 million and received Federal Energy Regulatory Commission approval for updated rates.

The facility should come online in the first quarter of 2027, subject to completion of federal commissioning work. Chesapeake now expects a full-year margin contribution of $19.7 million, while its 2027 margin expectation remains relatively consistent at $17.2 million. The margin forecast therefore remains tied to the commissioning schedule, which must clear before the facility comes online.

When can Florida rates become final?

Temporary Florida City Gas rates took effect in August and contributed $2.7 million of margin in the third quarter, Jim Moriarty, executive vice president and general counsel, said. Florida Public Service Commission staff recommendations are expected November 18, followed by revenue requirement conferences in early to mid-December and a final commission order in early January 2027.

A revenue requirement represents the revenue a utility seeks from customers to support its costs and investment. The case seeks recovery of spending on infrastructure and technology, making the final order a determinant of that investment's earnings contribution. "Chesapeake remains open to settlement discussions but does not consider a settlement likely," Householder said during the question-and-answer session.

What is customer growth adding?

Residential customer counts rose year to date in each named service territory. The increases were:

• Delmarva: 2.7%.
• Florida Public Utilities: 2%.
• Florida City Gas: 1.7%.

Those additions gave the revenue base broader support beyond infrastructure rate increases. Separately, healthcare claims ran above typical levels during the quarter, and Sylvester said the company was reviewing whether those costs belong in future expectations, although he leaned toward treating the quarter as an anomaly.

How will Chesapeake fund the program?

The company expects to issue $250 million of long-term debt in the fourth quarter, with part of the proceeds refinancing $100 million due in December. In August, it increased revolving credit capacity, or borrowing capacity under a reusable credit line, by $200 million to $650 million.

The debt plan addresses a near-term maturity while the company continues a capital program above $2.2 billion over five years. The larger credit line adds liquidity for project execution and operating needs. Sylvester reaffirmed 2028 EPS guidance of $7.75 to $8.00. On the February full-year earnings call, Chesapeake plans to provide 2027 capital guidance, a 2027-2031 capital plan and an EPS growth rate for that period.

Founded in 1859, Chesapeake provides natural gas, propane, electricity and related services to residential, commercial, industrial and institutional customers, primarily in Delaware, Maryland, Pennsylvania, Virginia, Florida and Ohio.

Its regulated operations distribute gas and electricity and transport natural gas through pipelines. Unregulated subsidiaries supply propane and other fuels, develop and operate energy infrastructure, and provide renewable natural gas and other energy solutions.