What changed in this filing

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Item 1. Financial Statements

2022-11-02 compared with 2022-08-03 · 220 added, 180 removed, 836 unchanged (32% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Income (Unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

27 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

13 unchanged sentences

Condensed Consolidated Balance Sheets (Unaudited)

Assets June 30,

Assets September 30,

2022 December 31,

35 unchanged sentences

Condensed Consolidated Balance Sheets (Unaudited)

Capitalization and Liabilities June 30,

Capitalization and Liabilities September 30,

2022 December 31,

37 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

49 unchanged sentences

Compensation Treasury

Balance at March 31, 2021 17,521,493 $ 8,528 $ 350,875 $ 369,623 $ ( 2,638 ) $ 6,992 $ ( 6,992 ) $ 726,388

Balance at June 30, 2021 17,567,928 $ 8,550 $ 357,520 $ 374,936 $ 558 $ 7,203 $ ( 7,203 ) $ 741,564

Net income — — — 12,475 — — — 12,475

5 unchanged sentences

Treasury stock activities — — — — — ( 17 ) 17 —

Balance at June 30, 2021 17,567,928 $ 8,550 $ 357,520 $ 374,936 $ 558 $ 7,203 $ ( 7,203 ) $ 741,564

Balance at September 30, 2021 17,587,834 $ 8,560 $ 361,066 $ 378,897 $ 2,439 $ 7,186 $ ( 7,186 ) $ 750,962

Balance at December 31, 2020 17,461,841 $ 8,499 $ 348,482 $ 342,969 $ ( 2,865 ) $ 5,679 $ ( 5,679 ) $ 697,085

6 unchanged sentences

Treasury stock activities — — — — — 1,507 ( 1,507 ) —

Balance at September 30, 2021 17,587,834 $ 8,560 $ 361,066 $ 378,897 $ 2,439 $ 7,186 $ ( 7,186 ) $ 750,962

Balance at June 30, 2022 17,734,794 $ 8,632 $ 376,866 $ 428,833 $ 1,370 $ 7,018 $ ( 7,018 ) $ 815,701

Balance at March 31, 2022 17,719,388 $ 8,624 $ 373,694 $ 421,344 $ 1,850 $ 6,477 $ ( 6,477 ) $ 805,512

Net income — — — 9,662 — — — 9,662

6 unchanged sentences

Treasury stock activities — — — — — ( 15 ) 15 —

Balance at June 30, 2022 17,734,794 $ 8,632 $ 376,866 $ 428,833 $ 1,370 $ 7,018 $ ( 7,018 ) $ 815,701

Balance at September 30, 2022 17,738,785 $ 8,634 $ 378,261 $ 428,941 $ ( 1,398 ) $ 7,003 $ ( 7,003 ) $ 814,438

Balance at December 31, 2021 17,655,410 $ 8,593 $ 371,162 $ 393,072 $ 1,303 $ 7,240 $ ( 7,240 ) $ 774,130

Net income — — — 63,646 — — — 63,646

Other comprehensive income — — — — 67 — — 67

Other comprehensive loss — — — — ( 2,701 ) — — ( 2,701 )

Dividends declared ($1.550 per share) — — — ( 27,777 ) — — — ( 27,777 )

4 unchanged sentences

Treasury stock activities — — — — — ( 237 ) 237 —

Balance at June 30, 2022 17,734,794 $ 8,632 $ 376,866 $ 428,833 $ 1,370 $ 7,018 $ ( 7,018 ) $ 815,701

Balance at September 30, 2022 17,738,785 $ 8,634 $ 378,261 $ 428,941 $ ( 1,398 ) $ 7,003 $ ( 7,003 ) $ 814,438

(1) 2,000,000 shares of preferred stock at $ 0.01 par value have been authorized.

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accordingly, no information has been included in the statements of stockholders’ equity.

(2) Includes 110,835 , 116,238 , 117,193 , and 105,087 shares at June 30, 2022, December 31, 2021, June 30, 2021 and December 31, 2020, respectively, held in a Rabbi Trust related to our Non-Qualified Deferred Compensation Plan.

(2) Includes 107,659 , 116,238 , 114,016 , and 105,087 shares at September 30, 2022, December 31, 2021, September 30, 2021 and December 31, 2020, respectively, held in a Rabbi Trust related to our Non-Qualified Deferred Compensation Plan.

(3) Includes amounts for shares issued for directors’ compensation.

(4) The shares issued under the SICP are net of shares withheld for employee taxes.

For the six months ended June 30, 2022 and 2021, we withheld 21,832 and 14,020 shares, respectively, for employee taxes.

(5) Includes the Retirement Savings Plan, DRIP and ATM equity issuances.

For the nine months ended September 30, 2022 and 2021, we withheld 21,832 and 14,020 shares, respectively, for employee taxes.

(5) Can include shares issued under the Retirement Savings Plan, DRIP and ATM equity issuances.

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

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Refer to Note 5, Rates and Other Regulatory Activities , for further information on the regulated assets established as a result of the incremental expenses associated with COVID-19.

Recent Accounting Standards Yet to be Adopted

FASB Statements and Other Authoritative Pronouncements

Recently Adopted Accounting Standards

Reference Rate Reform - (ASC 848) - In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

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The amendments included in this ASU are to be applied prospectively, and are not expected to have a material impact on our financial position or results of operations.

Refer to Note 16, Short-Term Borrowings , for further information regarding the expected timing of implementing this update.

Refer to Note 16, Short-Term Borrowings, for further information related to our implementation of this update.

Recent Accounting Standards Yet to be Adopted

There are no new accounting pronouncements that are applicable to us.

Calculation of Earnings Per Share

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

31 unchanged sentences

The amounts recorded in conjunction with the acquisition are preliminary, and subject to adjustment based on contractual provisions and finalization prior to the first anniversary of the transaction closing.

These acquisitions generated operating revenue and operating loss of $ 4.0 million and $ 0.8 million, respectively, for the three months ended June 30, 2022 .

For the six months ended June 30, 2022, the acquisitions generated operating revenue and operating income of $ 14.3 million and $ 0.7 million, respectively.

These acquisitions generated operating revenue and operating loss of $ 3.8 million and $ 0.8 million, respectively, for the three months ended September 30, 2022 .

For the nine months ended September 30, 2022, the acquisitions generated operating revenue and operating loss of $ 18.1 million and $ 0.2 million, respectively.

Acquisition of Planet Found Energy Development

In October 2022, we acquired Planet Found Energy Development, LLC for $ 9.5 million.

We accounted for this acquisition as a business combination within our Unregulated Energy Segment beginning in the fourth quarter of 2022.

Planet Found's farm scale anaerobic digestion pilot system and technology produces biogas from 1,200 tons of poultry litter annually, which can be used to create renewable energy in the form of electricity or upgraded to renewable natural gas.

The transaction will accelerate our efforts in converting poultry waste to renewable, sustainable energy while simultaneously improving the local environments in our service territories.

The operating revenues and operating income of this acquisition will be included in our financial results beginning in the fourth quarter of 2022.

Revenue Recognition

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Typically, our customers pay for the goods and/or services we provide in the month following the satisfaction of our performance obligation.

The following table displays our revenue by major source based on product and service type for the three months ended June 30, 2022 and 2021:

Three months ended June 30, 2022 Three months ended June 30, 2021

The following table displays our revenue by major source based on product and service type for the three months ended September 30, 2022 and 2021:

Three months ended September 30, 2022 Three months ended September 30, 2021

(in thousands) Regulated Energy Unregulated Energy Other and Eliminations Total Regulated Energy Unregulated Energy Other and Eliminations Total

26 unchanged sentences

$ 90,980 $ 47,914 $ ( 7,841 ) $ 131,053 $ 80,396 $ 32,109 $ ( 5,170 ) $ 107,335

(1) Total operating revenues for the three months ended June 30, 2022, include other revenue (revenues from sources other than contracts with customers) of $( 0.1 ) million for Regulated and $ 0.1 million Unregulated Energy segments, respectively, and $ 0.1 million for both our Regulated and Unregulated Energy segments, respectively, for the three months ended June 30, 2021.

(1) Total operating revenues include other revenue (revenues from sources other than contracts with customers) of $ 0.1 million for both of our Regulated and Unregulated Energy segments, respectively for all periods presented above.

The sources of other revenues include revenue from alternative revenue programs related to revenue normalization for the Maryland division and Sandpiper Energy and late fees.

The following table displays our revenue by major source based on product and service type for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

The following table displays our revenue by major source based on product and service type for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

(in thousands) Regulated Energy Unregulated Energy Other and Eliminations Total Regulated Energy Unregulated Energy Other and Eliminations Total

26 unchanged sentences

$ 311,064 $ 202,669 $ ( 20,330 ) $ 493,403 $ 282,503 $ 141,642 $ ( 14,541 ) $ 409,604

( 1) Total operating revenues for the six months ended June 30, 2022, include other revenue (revenues from sources other than contracts with customers) of $ 0.1 million for Regulated and $ 0.2 million Unregulated Energy segments, respectively, and $( 0.2 ) million and $ 0.2 million for our Regulated and Unregulated Energy segments, respectively, for the six months ended June 30, 2021.

( 1) Total operating revenues for the nine months ended September 30, 2022, include other revenue (revenues from sources other than contracts with customers) of $ 0.2 million for Regulated and $ 0.3 million Unregulated Energy segments, respectively, and $( 0.1 ) million and $ 0.3 million for our Regulated and Unregulated Energy segments, respectively, for the nine months ended September 30, 2021.

The sources of other revenues include revenue from alternative revenue programs related to revenue normalization for the Maryland division and Sandpiper Energy and late fees .

1 unchanged sentence

The timing of revenue recognition, customer billings and cash collections results in trade receivables, unbilled receivables (contract assets), and customer advances (contract liabilities) in our condensed consolidated balance sheets.

The balances of our trade receivables, contract assets, and contract liabilities as of June 30, 2022 and December 31, 2021 were as follows:

The balances of our trade receivables, contract assets, and contract liabilities as of September 30, 2022 and December 31, 2021 were as follows:

Trade Receivables Contract Assets (Current) Contract Assets (Non-current) Contract Liabilities (Current)

2 unchanged sentences

Balance at 9/30/2022

36,384 18 4,700 1,139

Decrease $ ( 19,893 ) $ — $ ( 106 ) $ 392

3 unchanged sentences

At times, we receive advances or deposits from our customers before we satisfy our performance obligation, resulting in contract liabilities.

Contract liabilities are included in other accrued liabilities in the condensed consolidated balance sheets and relate to non-refundable prepaid fixed fees for our Mid-Atlantic propane delivery operation's retail offerings.

Our performance obligation is satisfied over the term of the respective customer retail program on a ratable basis.

For the three months ended June 30, 2022 and 2021, we recognized revenue of $ 0.3 million and $ 0.2 million.

For the six months ended June 30, 2022 and 2021, we recognized revenue of $ 0.7 million and $ 0.6 million.

For the three months ended September 30, 2022 and 2021, we recognized revenue of $ 0.3 million and $ 0.2 million, respectively.

For the nine months ended September 30, 2022 and 2021, we recognized revenue of $ 1.0 million and $ 0.8 million, respectively.

Remaining Performance Obligations

Our businesses have long-term fixed fee contracts with customers in which revenues are recognized when performance obligations are satisfied over the contract term.

Revenue for these businesses for the remaining performance obligations, at June 30, 2022, are expected to be recognized as follows:

Revenue for these businesses for the remaining performance obligations, at September 30, 2022, are expected to be recognized as follows:

(in thousands) 2022 2023 2024 2025 2026 2027 2028 and thereafter

8 unchanged sentences

See the discussion below under COVID-19 impact .

Customer Information System Regulatory Asset Petition:

In July 2022, we filed a joint petition for our natural gas divisions in Maryland (Maryland Division, Sandpiper, and Elkton Gas) for the approval to establish a regulatory asset for non-capitalizable expenses related to the set-up and implementation of the Company’s new Customer Information System ("CIS") system.

The petition was approved by the Maryland PSC in August 2022.

A similar petition for our Florida Regulated Energy business units was filed during the same time frame and has not yet been scheduled on the Florida PSC Agenda.

The Delaware Division has previously received approval for this accounting treatment.

We have evaluated and selected the CIS with implementation which is anticipated to begin during the first quarter of 2023 and is expected to be completed in the first quarter of 2025.

Ocean City Maryland Reinforcement:

In March 2022, we filed a Section 7(f) - Request for Service Area Determination with the FERC regarding plans to extend our natural gas facilities across the Delaware/Maryland state line from Sussex County, Delaware, to Worcester County, Maryland, to provide a secondary feed to Sandpiper Energy.

The FERC approved the Section 7(f) request on August 29, 2022.

The project will increase the reliability of the existing distribution system in those areas while also expanding infrastructure to serve new customers.

Construction began in the second quarter of 2022, with estimated completion in the fourth quarter of 2022.

Construction has been initiated with estimated completion in late 2022 or early 2023.

Strategic Infrastructure Development and Enhancement (“STRIDE”) Plan:

1 unchanged sentence

The STRIDE plan accelerates Elkton Gas' Aldyl-A pipeline replacement program as costs of the plan are recovered through a fixed charge rider which is effective for five years.

Under Elkton Gas’ STRIDE plan, the Aldyl-A pipelines will be fully replaced by the end of 2023.

In July 2021, Elkton Gas reached a settlement with the Maryland PSC Staff and the Maryland Office of Public Counsel that approved Elkton Gas’ STRIDE plan.

The STRIDE plan allows for recovery of the associated revenue requirement through a monthly surcharge, which was implemented effective September 2021.

Under the Elkton Gas STRIDE plan, the Aldyl-A pipelines will be fully replaced by the end of 2023.

In July 2021, Elkton Gas reached a settlement with the Maryland PSC Staff and the Maryland Office of Public Counsel that approved the Elkton Gas STRIDE plan.

This plan allows for recovery of the associated revenue requirement through a monthly surcharge, which was implemented effective September 2021.

We filed the annual STRIDE plan update with the Maryland PSC on November 1, 2021, which was approved for new rates effective January 1, 2022.

Wildlight Expansion:

In August 2022, Peninsula Pipeline and FPU filed a joint petition with the Florida PSC for approval of the Transportation Service Agreement between the parties associated with the Wildlight Expansion project.

The Wildlight Expansion project will further enable us to meet the significant growing demand for service in Yulee, Florida.

The Agreement and project have been structured to allow us to build the project alongside the construction and development of the area, and charge the reservation rate as each phase of the project goes into service.

The Agreement reflects the construction of pipeline facilities in two separate phases.

Phase one will consist of three extensions with associated facilities, and a gas injection interconnect with associated facilities.

Phase two will consist of two additional pipeline extensions.

The various phases of the project are anticipated to be placed in service beginning in the first quarter of 2023, with construction on the overall project continuing through 2025.

We anticipate that the Agreement will be included on the November 2022 Florida PSC agenda.

Natural Gas Rate Case:

6 unchanged sentences

and (vi) authorization to establish an environmental remediation surcharge for the purposes of addressing future expected remediation costs for FPU MGP sites.

In August 2022, interim rates were approved by the Florida PSC in the amount of approximately $ 7.7 million on an annualized basis, effective for all meter reading in September 2022.

In August 2022, interim rates were approved by the Florida PSC in the amount of approximately $ 7.7 million on an annualized basis, effective for all meter readings in September 2022.

The interim rates are subject to refund pending the final outcome of the rate case proceeding.

The discovery process has commenced and hearing for the proceeding has been scheduled for October 2022.

The discovery process concluded in early October 2022 and the hearings for the proceeding were held later in the month.

Briefs for the proceeding will be due in late November 2022.

The outcome of the application is subject to review and approval by the Florida PSC.

1 unchanged sentence

In May 2021, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreement with CFG for an incremental 6,800 Dts/d of firm service in the Winter Haven, Florida area.

As part of this agreement, Peninsula Pipeline will construct a new interconnect with FGT and a new regulator station for CFG.

CFG will use the additional firm service to support new incremental load due to growth, including providing service to a new can manufacturing facility, as well as provide reliability and operational benefits to CFG’s existing distribution system in the area.

In connection with Peninsula Pipeline’s new regulator station, CFG is also extending its distribution system to connect to the new station.

The Transportation Service Agreement was approved by the Florida PSC in September 2021.

Construction commenced in February 2021 and the expected in-service date is the third quarter of 2022.

As part of this agreement, Peninsula Pipeline constructed a new interconnect with FGT and a new

regulator station for CFG.

This additional firm service is supporting new incremental load due to growth, including providing service to a new can manufacturing facility, as well as providing reliability and operational benefits to CFG’s existing distribution system in the area.

In connection with Peninsula Pipeline’s new regulator station, CFG also extended its distribution system to connect to the new station.

The Transportation Service Agreement was approved by the Florida PSC in September 2021 and the project was placed in service during the third quarter of 2022.

Beachside Pipeline Extension:

2 unchanged sentences

As required by Peninsula Pipeline’s tariff and Florida Statutes, Peninsula Pipeline filed the required company and customer affidavits with the Florida PSC in June 2021.

Construction commenced in June 2021 and the expected in-service date is first quarter of 2023.

Construction commenced in June 2021 and the expected in-service date is during the first quarter of 2023.

St.Cloud / Twin Lakes Expansion:

3 unchanged sentences

The extension will be used to support new incremental load due to growth in the area, including providing service, most immediately, to the residential development, Twin Lakes.

The expansion will also improve reliability and operation benefits to FPU's existing distribution system in the area, supporting future growth in the area.

We expect this expansion to be in service by the first quarter of 2023.

The expansion will also improve reliability and provide operational benefits to FPU's existing distribution system in the area, supporting future growth.

The petition was approved by the Florida PSC on October 4, 2022.

We expect this expansion to be in service by the second quarter of 2023.

Storm Protection Plan:

In 2020, the Florida PSC implemented the Storm Protection Plan ("SPP") and Storm Protection Plan Cost Recovery Clause ("SPPCRC") rules, which require electric utilities to petition the Florida PSC for approval of a Transmission and Distribution Storm Protection Plan that covers the utility’s immediate 10-year planning period with updates to the plan at least every 3 years.

The SPPCRC rules allow the utility to file for recovery of associated costs related to its SPP.

Our Florida electric distribution operation’s SPP plan was filed in April 2022, and hearings were held in August 2022.

The SPP was approved with modifications by the Florida PSC on October 4, 2 022.

The SPPCRC was filed in May 2022 with requested rates effective January 1, 2023.

The SPPCRC hearing is scheduled for November 2022.

Eastern Shore

2 unchanged sentences

The project will enable Eastern Shore to provide additional firm natural gas transportation service to an existing shipper on Eastern Shore's pipeline system, with a projected in-service date in the fourth quarter of 2023.

We are currently awaiting an order from the FERC on the Company's filing.

We are currently awaiting an order from the FERC on this filing.

Capital Cost Surcharge :

In June 2021, Eastern Shore submitted a filing with the FERC regarding a capital cost surcharge to recover capital costs associated with two mandated highway relocate projects that required the replacement of existing Eastern Shore facilities.

In June 2021, Eastern Shore submitted a filing with the FERC regarding a capital cost surcharge to recover capital costs associated with two mandated highway relocation projects that required the replacement of existing Eastern Shore facilities.

The capital cost surcharge was an approved item in Eastern Shore’s last rate case.

5 unchanged sentences

In response to this declaration and the rapid spread of COVID-19 within the United States, federal, state and local governments throughout the country imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness.

These restrictions significantly impacted economic conditions in the United States in 2020 and continued to impact economic conditions, to a lesser extent, through 2021.

These restrictions significantly impacted economic conditions in the United States in 2020 and continued to impact economic conditions, to a lesser extent, through 2021 and 2022.

Chesapeake Utilities is considered an “essential business,” which allowed us to continue operational activities and construction projects with appropriate safety precautions and personal protective equipment, while being mindful of the social distancing restrictions that were in place.

1 unchanged sentence

The additional operating expenses we incurred supported the ongoing delivery of our essential services during these unprecedented times.

In April and May 2020, we were authorized by the Maryland and Delaware PSCs, respectively, to record regulatory assets for COVID-19 related costs which offers us the ability to seek recovery of those costs.

In April and May 2020, we were authorized by the Maryland and Delaware PSCs, respectively, to record regulatory assets for COVID-19 related costs which offered us the ability to seek recovery of those costs.

In July 2021, the Florida PSC issued an order that approved incremental expenses we incurred due to COVID-19.

The order allowed us to establish a regulatory asset in a total amount of $ 2.1 million as of June 30, 2021 for natural gas and electric distribution operations.

The regulatory asset is amortized over two years and is recovered through the Purchased Gas Adjustment and Swing Service mechanisms for our natural gas distribution businesses and through the Fuel Purchased Power Cost Recovery clause for our electric division.

As of June 30, 2022 and December 31, 2021, our total COVID-19 regulatory asset balance was $ 1.8 million and $ 2.3 million, respectively.

The regulatory asset is being amortized over two years and is recovered through the Purchased Gas Adjustment and Swing Service mechanisms for our natural gas distribution businesses and through the Fuel Purchased Power Cost Recovery clause for our electric division.

As of September 30, 2022 and December 31, 2021, our total COVID-19 regulatory asset balance was $ 1.5 million and $ 2.3 million, respectively.

In 2021 and 2022, restrictions were gradually lifted as vaccines became widely available in the United States.

The various state of emergencies associated with the COVID-19 pandemic that were previously declared in our service territories have been terminated and we have adjusted our operating practices accordingly to ensure the safety of our operations and will take the necessary actions to comply with the CDC, and the Occupational Safety and Health Administration, as new developments occur.

Storm Protection Plan

In 2020, the Florida PSC implemented the Storm Protection Plan ("SPP") and Storm Protection Plan Cost Recovery ("SPPCR") rules, which require electric utilities to petition the Florida PSC for approval of a Transmission and Distribution Storm Protection Plan that covers the utility’s immediate 10-year planning period with updates to the plan at least every 3 years.

The SPPCR rules allow the utility to file for recovery of associated costs related to its SPP.

The Company’s SPP plan was filed in April 2022, with hearings scheduled for early August 2022.

The SPP cost recovery clause ("SPPCRC") was filed in May 2022 with requested rates effective January 1, 2023.

The SPPCRC hearing is scheduled for November 2022.

Summary TCJA Table

Customer rates for our regulated businesses were adjusted as approved by the regulators, prior to 2020 with the exception of Elkton Gas, which implemented a one-time bill credit in May 2020.

The following table summarizes the regulatory liabilities related to accumulated deferred taxes ("ADIT") associated with TCJA for our regulated businesses as of June 30, 2022 and December 31, 2021:

Customer rates for our regulated businesses were adjusted as approved by the regulators, prior to 2020 with the exception of Elkton Gas;

which implemented a one-time bill credit in May 2020.

The following table summarizes the regulatory liabilities related to accumulated deferred taxes ("ADIT") associated with TCJA for our regulated businesses as of September 30, 2022 and December 31, 2021:

Amount (in thousands)

Operation and Regulatory Jurisdiction June 30, 2022 December 31, 2021 Status

Operation and Regulatory Jurisdiction September 30, 2022 December 31, 2021 Status

Eastern Shore (FERC) $ 34,190 $ 34,190 Will be addressed in Eastern Shore's next rate case filing.

Delaware natural gas division (Delaware PSC) $ 12,510 $ 12,591 PSC approved amortization of ADIT in January 2019.

Maryland natural gas division (Maryland PSC) $ 3,772 $ 3,840 PSC approved amortization of ADIT in May 2018.

Chesapeake Delaware natural gas division (Delaware PSC) $ 12,469 $ 12,591 PSC approved amortization of ADIT in January 2019.

Chesapeake Maryland natural gas division (Maryland PSC) $ 3,737 $ 3,840 PSC approved amortization of ADIT in May 2018.

Sandpiper Energy (Maryland PSC) $ 3,612 $ 3,656 PSC approved amortization of ADIT in May 2018.

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and Winter Haven, Key West, Pensacola, Sanford and West Palm Beach, Florida.

As of June 30, 2022 and December 31, 2021, we had approximately $ 4.8 million and $ 5.2 million, respectively, in environmental liabilities related to the former MGP sites.

As of June 30, 2022 and December 31, 2021, we have cumulative regulatory assets of $ 1.0 million and $ 1.3 million, respectively, for future recovery of environmental costs for customers.

As of September 30, 2022 and December 31, 2021, we had approximately $ 4.6 million and $ 5.2 million, respectively, in environmental liabilities related to the former MGP sites.

As of September 30, 2022 and December 31, 2021, we have cumulative regulatory assets of $ 0.9 million and $ 1.3 million, respectively, for future recovery of environmental costs for customers.

Specific to FPU’s four MGP sites in Key West, Pensacola, Sanford and West Palm Beach, FPU has approval to recover, from insurance and through customer rates, up to $ 14.0 million of its environmental costs related to its MGP sites.

As of June 30, 2022 and December 31, 2021, we had recovered approximately $ 13.1 million and $ 12.9 million, respectively, leaving approximately $ 0.9 million and $ 1.1 million, respectively, in regulatory assets for future recovery of environmental costs from FPU’s customers.

As of September 30, 2022 and December 31, 2021, we had recovered approximately $ 13.2 million and $ 12.9 million, respectively, leaving approximately $ 0.8 million and $ 1.1 million, respectively, in regulatory assets for future recovery of environmental costs from FPU’s customers.

Environmental liabilities for our MGP sites are recorded on an undiscounted basis based on the estimate of future costs provided by independent consultants.

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Similar remedial actions have been initiated on the site's west parcel, and construction of active remedial systems are expected to be completed in 2023.

We expect the costs to clean-up the site to be between $3.3 million to $14.2 million, including costs associated with relocation of FPU's operations at this site, and any potential costs associated with future redevelopment of the properties.

We expect the costs to clean-up the site to be between $3.3 million to $14.2 million, including any potential costs associated with future redevelopment of the properties.

Other Commitments and Contingencies

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FPU’s electric supply contracts require FPU to maintain an acceptable standard of creditworthiness based on specific financial ratios.

FPU’s agreement with Florida Power & Light Company requires FPU to meet or exceed a debt service coverage ratio of 1.25 times based on the results of the prior 12 months.

FPU’s agreement with Florida Power & Light Company requires FPU to meet or exceed a debt service

coverage ratio of 1.25 times based on the results of the prior 12 months.

If FPU fails to meet this ratio, it must provide an irrevocable letter of credit or pay all amounts outstanding under the agreement within five business days.

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Failure to comply with the ratios specified in the Gulf Power agreement could also result in FPU having to provide an irrevocable letter of credit.

As of June 30, 2022, FPU was in compliance with all of the requirements of its fuel supply contracts.

As of September 30, 2022, FPU was in compliance with all of the requirements of its fuel supply contracts.

Eight Flags provides electricity and steam generation services through its CHP plant located on Amelia Island, Florida.

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The Board of Directors has authorized us to issue corporate guarantees securing obligations of our subsidiaries and to obtain letters of credit securing our subsidiaries' obligations.

The maximum authorized liability under such guarantees and letters of credit as of June 30, 2022 was $ 20.0 million.

The aggregate amount guaranteed related to our subsidiaries at June 30, 2022 was approximately $ 11.4 million with the guarantees expiring on various dates through May 22, 2023.

The maximum authorized liability under such guarantees and letters of credit as of September 30, 2022 was $ 20.0 million.

The aggregate amount guaranteed related to our subsidiaries at September 30, 2022 was approximately $ 12.0 million with the guarantees expiring on various dates through August 9, 2023.

In addition, the Board has authorized us to issue specific purpose corporate guarantees.

The amount of specific purpose guarantees outstanding at June 30, 2022 was $ 2.0 million.

In July 2022, in connection with the Florida rate case, we entered into a guarantee in the amount of $ 7.1 million with the Florida PSC.

As of June 30, 2022, we have issued letters of credit totaling approximately $ 5.3 million related to the electric transmission services for FPU's electric division, the firm transportation service agreement between TETLP and our Delaware and Maryland divisions, the capacity agreement between NEXUS and Aspire, and our current and previous primary insurance carriers.

These letters of credit have various expiration dates through October 25, 2022.

There have been no draws on these letters of credit as of June 30, 2022.

The amount of specific purpose guarantees outstanding at September 30, 2022 was $ 11.1 million, including a guarantee issued in July 2022 in the amount of $ 7.1 million associated with the Florida natural gas rate case.

As of September 30, 2022, we have issued letters of credit totaling approximately $ 5.3 million related to the electric transmission services for FPU's electric division, the firm transportation service agreement between TETLP and our Delaware and Maryland divisions, the capacity agreement between NEXUS and Aspire, and our current and previous primary insurance carriers.

These letters of credit have various expiration dates through September 30, 2023 and to date, none have been used.

We do not anticipate that the counterparties will draw upon these letters of credit, and we expect that they will be renewed to the extent necessary in the future.

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• Unregulated Energy.

Includes energy transmission, energy generation (the operations of our Eight Flags' CHP plant), propane operations, and mobile compressed natural gas distribution and pipeline solutions subsidiary.

Includes energy transmission, energy generation (the operations of our Eight Flags' CHP plant), propane operations, and mobile compressed natural gas delivery and virtual pipeline solutions subsidiary.

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.

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The following table presents financial information about our reportable segments:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

9 unchanged sentences

Total intersegment revenues $ 7,886 $ 5,302 $ 20,592 $ 14,937

Operating Income

Operating Income/(Loss)

Regulated Energy $ 23,663 $ 23,370 $ 84,202 $ 78,835

8 unchanged sentences

(1) All significant intersegment revenues are billed at market rates and have been eliminated from consolidated operating revenues.

(in thousands) June 30, 2022 December 31, 2021

(in thousands) September 30, 2022 December 31, 2021

Identifiable Assets

10 unchanged sentences

In 2021, we issued just over 0.1 million shares at an average price per share of $ 125.71 and received net proceeds of $ 15.2 million under the DRIP.

In the first six months of 2022, we issued less than 0.1 million shares at an average price per share of $ 137.24 and received net proceeds of $ 4.3 million under the DRIP.

In the first nine months of 2022, we issued less than 0.1 million shares at an average price per share of $ 136.87 and received net proceeds of $ 4.4 million under the DRIP.

We used the net proceeds from our share issuances, after fees, for general corporate purposes, including, but not limited to, financing of capital expenditures, repayment of short-term debt, financing acquisitions, investing in subsidiaries, and general working capital purposes.

1 unchanged sentence

Defined benefit pension and postretirement plan items, unrealized gains (losses) of our propane swap agreements designated as commodity contracts cash flow hedges, and the unrealized gains (losses) of our interest rate swap agreements designated as cash flow hedges are the components of our accumulated other comprehensive income (loss).

The following tables present the changes in the balance of accumulated other comprehensive gain (loss) as of June 30, 2022 and 2021.

The following tables present the changes in the balance of accumulated other comprehensive gain (loss) as of September 30, 2022 and 2021.

All amounts in the following tables are presented net of tax.

2 unchanged sentences

Postretirement Cash Flow Cash Flow

Plan Items Hedges Hedges (1)

Plan Items Hedges Hedges Total

(in thousands)

As of December 31, 2021 $ ( 3,268 ) $ 4,571 $ — $ 1,303

Other comprehensive income before reclassifications — 2,206 — 2,206

Other comprehensive income/(loss) before reclassifications — ( 613 ) 153 ( 460 )

Amounts reclassified from accumulated other comprehensive income/(loss) 53 ( 2,294 ) — ( 2,241 )

Net current-period other comprehensive income 35 32 — 67

As of June 30, 2022 $ ( 3,233 ) $ 4,603 $ — $ 1,370

Net current-period other comprehensive income/(loss) 53 ( 2,907 ) 153 ( 2,701 )

As of September 30, 2022 $ ( 3,215 ) $ 1,664 $ 153 $ ( 1,398 )

(in thousands)

3 unchanged sentences

Net prior-period other comprehensive income 192 5,094 18 5,304

As of June 30, 2021 $ ( 5,018 ) $ 5,600 $ ( 24 ) $ 558

( 1) All of our interest rate swaps expired at December 31, 2021

The following table presents amounts reclassified out of accumulated other comprehensive income (loss) for the three and six months ended June 30, 2022 and 2021.

As of September 30, 2021 $ ( 4,954 ) $ 7,403 $ ( 10 ) $ 2,439

The following table presents amounts reclassified out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2022 and 2021.

Deferred gains or losses for our commodity contracts and interest rate swap cash flow hedges are recognized in earnings upon settlement.

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

24 unchanged sentences

Employee Benefit Plans

Net periodic benefit costs for our pension and post-retirement benefits plans for the three and six months ended June 30, 2022 and 2021 are set forth in the following tables:

Net periodic benefit costs for our pension and post-retirement benefits plans for the three and nine months ended September 30, 2022 and 2021 are set forth in the following tables:

Pension Plan FPU

1 unchanged sentence

Postretirement

For the Three Months Ended June 30, 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

For the Three Months Ended September 30, 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

(in thousands)

7 unchanged sentences

Postretirement

For the Six Months Ended June 30, 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

For the Nine Months Ended September 30, 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

(in thousands)

11 unchanged sentences

The portion of the unrecognized pension and postretirement benefit costs related to FPU’s unregulated operations and Chesapeake Utilities' operations is recorded to accumulated other comprehensive income.

The following tables present the amounts included in the regulatory asset and accumulated other comprehensive income that were recognized as components of net periodic benefit cost during the three and six months ended June 30, 2022 and 2021:

For the Three Months Ended June 30, 2022 Chesapeake

For the Three Months Ended September 30, 2022 Chesapeake

Plan Chesapeake SERP Chesapeake

8 unchanged sentences

Total $ — $ 124 $ 7 $ ( 7 ) $ — $ 124

For the Three Months Ended June 30, 2021 Chesapeake

For the Three Months Ended September 30, 2021 Chesapeake

Plan Chesapeake SERP Chesapeake

8 unchanged sentences

Total $ 60 $ 155 $ 7 $ ( 9 ) $ ( 2 ) $ 211

For the Six months ended June 30, 2022 Chesapeake

For the Nine months ended September 30, 2022 Chesapeake

Plan Chesapeake SERP Chesapeake

8 unchanged sentences

Total $ — $ 372 $ 21 $ ( 21 ) $ — $ 372

For the Six months ended June 30, 2021 Chesapeake

For the Nine months ended September 30, 2021 Chesapeake

Plan Chesapeake SERP Chesapeake

9 unchanged sentences

( 1) See Note 9 , Stockholders' Equity .

During the three and six months ended June 30, 2022, we contributed $ 0.1 million to the FPU Pension Plan.

During the three and nine months ended September 30, 2022, we contributed $ 0.1 million to the FPU Pension Plan.

We expect to contribute approximately $ 0.3 million to the FPU Pension Plan during 2022, which represents the minimum annual contribution payments required.

The Chesapeake SERP, the Chesapeake Postretirement Plan and the FPU Medical Plan are unfunded and are expected to be paid out of our general funds.

Cash benefits paid under the Chesapeake SERP for the three and six months ended June 30, 2022 were less than $ 0.1 million in both periods.

Cash benefits paid under the Chesapeake SERP for the three and nine months ended September 30, 2022 were immaterial and $ 0.1 million, respectively.

We expect to pay total cash benefits of approximately $ 0.2 million under the Chesapeake SERP in 2022.

Cash benefits paid under the Chesapeake Postretirement Plan, primarily for medical claims for both the three and six months ended June 30, 2022 were $ 0.1 million.

Cash benefits paid under the Chesapeake Postretirement Plan, primarily for medical claims for the three and nine months ended September 30, 2022 were $ 0.1 million and $ 0.2 million, respectively.

We estimate that approximately $ 0.2 million will be paid for such benefits under the Chesapeake Postretirement Plan in 2022.

Cash benefits paid under the FPU Medical Plan, primarily for medical claims for the three and six months ended June 30, 2022, were immaterial.

Cash benefits paid under the FPU Medical Plan, primarily for medical claims for the three and nine months ended September 30, 2022, were immaterial.

We estimate that approximately $ 0.1 million will be paid for such benefits under the FPU Medical Plan in 2022.

The investment balances at June 30, 2022 and December 31, 2021, consisted of the following:

(in thousands) June 30,

The investment balances at September 30, 2022 and December 31, 2021, consisted of the following:

(in thousands) September 30,

2022 December 31,

3 unchanged sentences

We classify these investments as trading securities and report them at their fair value.

For the three months ended June 30, 2022 and 2021, we recorded a net unrealized loss of $ 1.4 million and a net unrealized gain of $ 0.6 million, respectively, in other income, net in the condensed consolidated statements of income related to these investments.

For the six months ended June 30, 2022 and 2021, we recorded a net unrealized loss of approximately $ 2.0 million and a net unrealized gain of approximately $ 1.0 million, respectively, in other expense, net in the condensed consolidated statements of income related to these investments.

For the three months ended September 30, 2022 and 2021, we recorded a net unrealized loss of $ 0.4 million and a net unrealized loss of less than $ 0.1 million, respectively, in other income, net in the condensed consolidated statements of income related to these investments.

For the nine months ended September 30, 2022 and 2021, we recorded a net unrealized loss of approximately $ 2.4 million and a net unrealized gain of approximately $ 1.0 million, respectively, in other expense, net in the condensed consolidated statements of income related to these investments.

For the investment in the Rabbi Trust, we also have recorded an associated liability, which is included in other pension and benefit costs in the consolidated balance sheets and is adjusted each period for the gains and losses incurred by the investments in the Rabbi Trust.

3 unchanged sentences

The compensation cost is based primarily on the fair value of the shares awarded, using the estimated fair value of each share on the date it was granted and the number of shares to be issued at the end of the service period.

The table below presents the amounts included in net income related to share-based compensation expense for the three and six months ended June 30, 2022 and 2021:

Three Months Ended Six Months Ended

June 30, June 30,

The table below presents the amounts included in net income related to share-based compensation expense for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

10 unchanged sentences

accordingly, 6,520 shares, with a weighted average fair value of $ 130.36 per share, were issued and vested in 2022.

At June 30, 2022, there was approximately $ 0.7 million of unrecognized compensation expense related to shares granted to non-employee directors.

This expense will be recognized over the remaining service period ending in May of 2023.

In July, 2022, we announced the appointment of two new non-employee directors to our current Board.

These newly appointed directors will be granted share-based awards through the SICP that will be pro-rated in accordance with the beginning of their service period.

The associated expense will be recognized in the same manner utilized for our current non-employee directors.

These newly appointed directors were each granted a pro-rated share-based award of 526 shares through the SICP in accordance with the beginning of their service period.

The associated expense is being recognized in the same manner utilized for our pre-existing non-employee directors.

At September 30, 2022, there was approximately $ 0.6 million of unrecognized compensation expense related to shares granted to non-employee directors.

This expense will be recognized over the remaining service period ending in May 2023.

Key Employees

The table below presents the summary of the stock activity for awards to key employees for the six months ended June 30, 2022:

The table below presents the summary of the stock activity for awards to key employees for the nine months ended September 30, 2022:

Number of Shares Weighted Average

3 unchanged sentences

Expired 557 $ 91.42

Outstanding—June 30, 2022 204,047 $ 102.91

During the six months ended June 30, 2022, we granted awards of 66,942 shares of common stock to key employees under the SICP, including awards granted in February 2022 and to key employees appointed in officer positions.

Outstanding—September 30, 2022 204,563 $ 103.01

During the nine months ended September 30, 2022, we granted awards of 67,458 shares of common stock to key employees under the SICP, including awards granted in February 2022 and to key employees appointed in officer positions.

The shares granted are multi-year awards that will vest no later than the three-year service period ending December 31, 2024.

2 unchanged sentences

For the market-based conditions, we used the Monte Carlo valuation to estimate the fair value of each market-based award granted.

In March 2022, upon the election by certain of our executive officers, we withheld shares with a value at least equivalent to each such executive officer’s minimum statutory obligation for applicable income and other employment taxes related to shares that vested and were paid in February 2022 for the performance period ended December 31, 2021, paid the balance of such awarded shares to each such executive officer net cash remitted to the appropriate taxing authorities.

In March 2022, upon the election by certain of our executive officers, we withheld shares with a value at least equivalent to each such executive officer’s minimum statutory obligation for applicable income and other employment taxes related to shares that vested and were paid in February 2022 for the performance period ended December 31, 2021, and paid the balance of such awarded shares to each such executive officer net cash remitted to the appropriate taxing authorities.

We withheld 21,832 shares, based on the value of the shares on their award date.

Total combined payments for the employees’ tax obligations to the taxing authorities were approximately $ 2.8 million.

At June 30, 2022, the aggregate intrinsic value of the SICP awards granted to key employees was approximately $ 26.4 million.

At June 30, 2022, there was approximately $ 8.8 million of unrecognized compensation cost related to these awards, which will be recognized through 2024.

At September 30, 2022, the aggregate intrinsic value of the SICP awards granted to key employees was approximately $ 23.6 million.

At September 30, 2022, there was approximately $ 7.7 million of unrecognized compensation cost related to these awards, which will be recognized through 2024.

Stock Options

There were no stock options outstanding or issued during the six months ended June 30, 2022 and 2021.

There were no stock options outstanding or issued during the nine months ended September 30, 2022 and 2021.

Derivative Instruments

5 unchanged sentences

Occasionally, we may enter into interest rate swap agreements to mitigate risk associated with changes in short-term borrowing rates.

As of June 30, 2022, our natural gas and electric distribution operations did not have any outstanding derivative contracts.

As of September 30, 2022, our natural gas and electric distribution operations did not have any outstanding derivative contracts.

Volume of Derivative Activity

As of June 30, 2022, the volume of our commodity derivative contracts were as follows:

As of September 30, 2022, the volume of our commodity derivative contracts were as follows:

Business unit Commodity Contract Type Quantity hedged (in millions) Designation Longest Expiration date of hedge

Sharp Propane (gallons) Purchases 16.0 Cash flows hedges June 2024

Sharp Propane (gallons) Purchases 23.5 Cash flows hedges August 2025

Sharp Propane (gallons) Sales 3.8 Cash flows hedges March 2023

Sharp entered into futures and swap agreements to mitigate the risk of fluctuations in wholesale propane index prices associated with the propane volumes that are expected to be purchased and/or sold during the heating season.

Under the futures and swap agreements, Sharp will receive the difference between (i) the index prices (Mont Belvieu prices in June 2022 through June 2024) and (ii) the per gallon propane swap prices, to the extent the index prices exceed the contracted prices.

Under the futures and swap agreements, Sharp will receive the difference between (i) the index prices (Mont Belvieu prices in September 2022 through August 2025) and (ii) the per gallon propane swap prices, to the extent the index prices exceed the contracted prices.

If the index prices are lower than the contract prices, Sharp will pay the difference.

1 unchanged sentence

The change in the fair value of the swap agreements is recorded as unrealized gain (loss) in other comprehensive income (loss) and later recognized in the statement of income in the same period and in the same line item as the hedged transaction.

We expect to reclassify approximately $ 3.8 million from accumulated other comprehensive income to earnings during the next 12 -month period ended June 30, 2023.

We expect to reclassify approximately $ 1.2 million from accumulated other comprehensive income to earnings during the next 12 -month period ended September 30, 2023.

Interest Rate Swap Activities

2 unchanged sentences

In February 2021, we entered into an additional interest rate swap with a notional amount of $ 40.0 million through December 2021 with pricing of 0.17 percent.

Our short-term borrowing is based on the 30-day LIBOR rate.

The interest swaps were cash settled monthly as the counter-party pays us the 30-day LIBOR rate less the fixed rate.

At December 31, 2021 all of our interest rate swaps had expired and we have not entered into any new derivative contracts associated with our outstanding short-term borrowings in 2022.

We designated and accounted for interest rate swaps as cash flows hedges.

Accordingly, unrealized gains and losses associated with the interest rate swaps were recorded as a component of accumulated other comprehensive income (loss).

When the interest rate swaps settled, the realized gain or loss was recorded in the income statement and recognized as a component of interest charges.

In September 2022, we entered into an interest rate swap with a notional amount of $ 50.0 million through September 2025, with pricing of 3.98 percent.

Prior to August 2022, our short-term borrowing was based on the 30-day LIBOR rate.

In August 2022, we amended and restated our revolver and transitioned the benchmark interest rate to the 30-day SOFR as a result of the impending expiration of LIBOR.

Our prior interest rate swaps were cash settled monthly as the counter-party paid us the 30-day LIBOR rate less the fixed rate.

Our current interest rate swap is cash settled monthly as the counter-party pays us the 30-day SOFR rate less the fixed rate.

We designate and account for interest rate swaps as cash flows hedges.

Accordingly, unrealized gains and losses associated with the interest rate swaps are recorded as a component of accumulated other comprehensive income (loss).

When the interest rate swaps settle, the realized gain or loss is recorded in the income statement and is recognized as a component of interest charges.

Broker Margin

2 unchanged sentences

We currently maintain a broker margin account for Sharp as follows:

(in thousands) Balance Sheet Location June 30, 2022 December 31, 2021

(in thousands) Balance Sheet Location September 30, 2022 December 31, 2021

Sharp Other Accrued Liabilities $ 1,493 $ 4,081

2 unchanged sentences

We did not have any derivative contracts with a credit-risk-related contingency.

Fair values of the derivative contracts recorded in the consolidated balance sheets as of June 30, 2022 and December 31, 2021, are as follows:

Fair values of the derivative contracts recorded in the consolidated balance sheets as of September 30, 2022 and December 31, 2021, are as follows:

Derivative Assets

Fair Value As Of

(in thousands) Balance Sheet Location June 30, 2022 December 31, 2021

(in thousands) Balance Sheet Location September 30, 2022 December 31, 2021

Derivatives not designated as hedging instruments

2 unchanged sentences

Propane swap agreements Derivative assets, at fair value 4,175 7,060

Interest rate swap agreements Derivative assets, at fair value 377 —

Total Derivative Assets $ 4,552 $ 7,076

1 unchanged sentence

Fair Value As Of

(in thousands) Balance Sheet Location June 30, 2022 December 31, 2021

(in thousands) Balance Sheet Location September 30, 2022 December 31, 2021

Derivatives designated as cash flow hedges

Propane swap agreements Derivative liabilities, at fair value $ 1,881 $ 743

Interest rate swap agreements Derivative liabilities, at fair value 170 —

Total Derivative Liabilities $ 2,051 $ 743

The effects of gains and losses from derivative instruments on the condensed consolidated financial statements are as follows:

Amount of Gain (Loss) on Derivatives:

Location of Gain For the Three Months Ended June 30, For the Six Months Ended June 30,

Location of Gain For the Three Months Ended September 30, For the Nine Months Ended September 30,

(in thousands) (Loss) on Derivatives 2022 2021 2022 2021

9 unchanged sentences

Interest expense — 24 — 50

Interest rate swap agreements Other comprehensive income — 8 — 5

Interest rate swap agreements Other comprehensive income (loss) 207 19 207 24

Total $ ( 3,741 ) $ 3,215 $ ( 653 ) $ 11,272

9 unchanged sentences

Financial Assets and Liabilities Measured at Fair Value

The following tables summarize our financial assets and liabilities that are measured at fair value on a recurring basis and the fair value measurements, by level, within the fair value hierarchy as of June 30, 2022 and December 31, 2021:

Fair Value Measurements Using:

As of June 30, 2022 Fair Value Quoted Prices in

As of September 30, 2022 Fair Value Quoted Prices in

Active Markets

22 unchanged sentences

Derivative liabilities $ 743 $ — $ 743 $ —

The following table sets forth the summary of the changes in the fair value of Level 3 investments for the six months ended June 30, 2022 and 2021:

Six months ended June 30,

The following table sets forth the summary of the changes in the fair value of Level 3 investments for the nine months ended September 30, 2022 and 2021:

Nine months ended September 30,

(in thousands)

5 unchanged sentences

Ending Balance $ 1,846 $ 2,016

Investment income from the Level 3 investments is reflected in other expense, (net) in the condensed consolidated statements of income.

At June 30, 2022, there were no non-financial assets or liabilities required to be reported at fair value.

Investment income from the Level 3 investments is reflected in other income, (net) in the condensed consolidated statements of income.

At September 30, 2022, there were no non-financial assets or liabilities required to be reported at fair value.

We review our non-financial assets for impairment at least on an annual basis, as required.

4 unchanged sentences

The fair value of short-term debt approximates the carrying value due to its near-term maturities and because interest rates approximate current market rates (Level 3 measurement).

At June 30, 2022, long-term debt, which includes current maturities but excludes debt issuance costs, had a carrying value of approximately $ 608.3 million, compared to the estimated fair value of $ 540.6 million.

At September 30, 2022, long-term debt, which includes current maturities but excludes debt issuance costs, had a carrying value of approximately $ 606.3 million, compared to the estimated fair value of $ 504.9 million.

At December 31, 2021, long-term debt, which includes the current maturities but excludes debt issuance costs, had a carrying value of approximately $ 568.8 million, compared to a fair value of approximately $ 597.2 million.

3 unchanged sentences

Our outstanding long-term debt is shown below:

June 30, December 31,

September 30, December 31,

(in thousands) 2022 2021

20 unchanged sentences

Total long-term debt, net of current maturities $ 583,833 $ 549,903

Note Purchase Agreement

Note Purchase Agreements

On March 15, 2022 we issued 2.95 percent Senior Notes due March 15, 2042 to MetLife in the aggregate principal amount of $ 50.0 million.

1 unchanged sentence

These Senior Notes have similar covenants and default provisions as our other Senior Notes, and have an annual principal payment beginning in the eleventh year after the issuance.

On September 28, 2022, we agreed to issue and Prudential agreed to purchase 5.43 percent Senior Notes due March 14, 2038 in the aggregate principal amount of $ 80.0 million.

We expect to issue the Notes on or before March 14, 2023.

We anticipate using the proceeds received from the issuance of the Notes to reduce short-term borrowings under our revolving credit facility and to fund capital expenditures.

Equipment Security Note

4 unchanged sentences

We have entered into Shelf Agreements with Prudential and MetLife, whom are under no obligation to purchase any unsecured debt.

The following table summarizes our Shelf Agreements at June 30, 2022:

The following table summarizes our Shelf Agreements at September 30, 2022:

(in thousands) Total Borrowing Capacity Less:

6 unchanged sentences

150,000 ( 50,000 ) — 100,000

Total Shelf Agreements as of June 30, 2022

Total Shelf Agreements as of September 30, 2022

$ 520,000 $ ( 270,000 ) $ ( 80,000 ) $ 170,000

(1) The Prudential and MetLife Shelf Agreements expire in April 2023 and May 2023, respectively.

(2) Unfunded commitments of $ 80.0 million reflects Senior Notes expected to be issued on or before March 14, 2023.

The Uncollateralized Senior Notes, Shelf Agreements or Shelf Notes set forth certain business covenants to which we are subject when any note is outstanding, including covenants that limit or restrict our ability, and the ability of our subsidiaries, to incur indebtedness, or place or permit liens and encumbrances on any of our property or the property of our subsidiaries.

1 unchanged sentence

We are authorized by our Board of Directors to borrow up to $ 400.0 million of short-term debt, as required.

At June 30, 2022 and December 31, 2021, we had $ 137.0 million and $ 221.6 million, respectively, of short-term borrowings outstanding at a weighted average interest rate of 2.38 percent and 0.83 percent, respectively.

At September 30, 2022 and December 31, 2021, we had $ 167.3 million and $ 221.6 million, respectively, of short-term borrowings outstanding at a weighted average interest rate of 4.13 percent and 0.83 percent, respectively.

Included in the September 30, 2022 balance, is $ 50.0 million in short-term debt for which we have entered into an interest rate swap agreement.

In August 2021, we amended and restated our Revolver into a multi-tranche facility totaling $ 400.0 million with multiple participating lenders.

1 unchanged sentence

We are eligible to establish the repayment term for individual borrowings under the five year tranche of the Revolver and to the extent that an individual loan under the Revolver exceeded 12 months, the outstanding balance would be classified as a component of long-term debt.

In August 2022, we amended both tranches of the Revolver, which now bear interest using SOFR as the benchmark interest rate, plus a 10-basis point SOFR adjustment, in lieu of LIBOR which is being retired by financial institutions.

In addition, the 364-day tranche was extended for the upcoming year, expiring in August 2023.

Furthermore, the previous covenant capping the aggregate investments at $ 150.0 million where we maintain a less than 50 percent ownership interest has been eliminated and the 364 day tranche of the facility now offers a reduced interest margin similar to the five-year tranche for amounts borrowed in connection to certain sustainable investments.

All other terms and conditions remained unchanged.

The availability of funds under the Revolver is subject to conditions specified in the credit agreement, all of which we currently satisfy.

1 unchanged sentence

We are required by the financial covenants in the Revolver to maintain, at the end of each fiscal year, a funded indebtedness ratio of no greater than 65 percent.

As of June 30, 2022, we are in compliance with this covenant.

The 364-day tranche of the Revolver expires in August 2022 and the five-year tranche expires in August 2026 both are available to fund for our short-term cash needs to meet seasonal working capital requirements and to temporarily fund portions of our capital expenditures.

Borrowings under both tranches of the Revolver are subject to a pricing grid, including the commitment fee and the interest rate charged.

Our pricing is adjusted each quarter based upon a total indebtedness to total capitalization ratio.

As of June 30, 2022, the pricing under the 364-day tranche of the Revolver does not include an unused commitment fee and maintains an interest rate of 0.70 percent over LIBOR.

As of June 30, 2022, the pricing under the five-year tranche of the Revolver included an unused commitment fee of 0.09 percent and an interest rate of 0.95 percent over LIBOR.

We are currently in discussions with the various lending institutions regarding the renewal of the 364-day tranche.

At that time, the reference interest rate for the 364-day and five-year tranche will transition from LIBOR which is being retired by financial institutions to the Standard Overnight Financing Rate ("SOFR").

We do not expect this transition to have a material impact on our financial condition.

Our total available credit under the Revolver at June 30, 2022 was $ 257.7 million.

As of June 30, 2022, we had issued $ 5.3 million in letters of credit to various counterparties under the syndicated Revolvers.

These letters of credit are not included in the outstanding short-term borrowings and we do not anticipate that they will be drawn upon by the counterparties.

The letters of credit reduce the available borrowings under our syndicated Revolver.

In the fourth quarter of 2020, we entered into two $ 30.0 million interest rate swaps with a notional amount of $ 60.0 million through September and December 2021 at a pricing of 0.205 and 0.20 percent, respectively.

In February 2021, we entered into an additional interest rate swap with a notional amount of $ 40.0 million through December 2021 with pricing of 0.17 percent.

Our short-term borrowing is based on the 30-day LIBOR rate.

At December 31, 2021, all of our interest rate swaps had expired and we have not entered into any new derivative contracts associated with our outstanding short-term borrowings.

As of September 30, 2022, we are in compliance with this covenant.

The 364-day tranche of the Revolver expires in August 2023 and the five-year tranche expires in August 2026 both of which are available to fund our short-term cash needs to meet seasonal working capital requirements and to temporarily fund portions of our capital expenditures.

Borrowings under both tranches of the Revolver are subject to a pricing grid, including the commitment fee and the interest rate charged based upon our total indebtedness to total capitalization ratio for the prior quarter.

As of September 30, 2022, the pricing under the 364-day tranche of the Revolver does not include an unused commitment fee and maintains an interest rate of 70 basis points over SOFR plus a 10 basis point SOFR adjustment.

As of September 30, 2022, the pricing under the five-year tranche of the Revolver included an unused commitment fee of 9 basis points and an interest rate of 95 basis points over SOFR plus a 10 basis point SOFR adjustment.

The total available credit under the Revolver at September 30, 2022 was $ 227.4 million.

As of September 30, 2022, we had issued $ 5.3 million in letters of credit to various counterparties under the Revolver.

These letters of credit are not

included in the outstanding short-term borrowings and we do not anticipate that they will be drawn upon by the counterparties.

The letters of credit reduce the available borrowings under the Revolver.

In the fourth quarter of 2020, we entered into two $ 30.0 million interest rate swaps with a notional amount of $ 60.0 million through September and December 2021 at a price of 0.205 and 0.20 over LIBOR, respectively.

In February 2021, we entered into an additional interest rate swap with a notional amount of $ 40.0 million through December 2021 with a price of 0.17 over LIBOR.

In the third quarter of 2022, we entered into an interest rate swap with a notional amount of $ 50.0 million through September 30, 2025 at a price of 3.98 percent.

We have entered into lease arrangements for office space, land, equipment, pipeline facilities and warehouses.

10 unchanged sentences

The exercise of lease renewal options is at our sole discretion.

The amounts disclosed in our consolidated balance sheet at June 30, 2022, pertaining to the right-of-use assets and lease liabilities, are measured based on our current expectations of exercising our available renewal options.

The amounts disclosed in our consolidated balance sheet at September 30, 2022, pertaining to the right-of-use assets and lease liabilities, are measured based on our current expectations of exercising our available renewal options.

Our existing leases are not subject to any restrictions or covenants that would preclude our ability to pay dividends, obtain financing or enter into additional leases.

As of June 30, 2022, we have not entered into any leases, which have not yet commenced, that would entitle us to significant rights or create additional obligations.

As of September 30, 2022, we have not entered into any leases, which have not yet commenced, that would entitle us to significant rights or create additional obligations.

The following table presents information related to our total lease cost included in our consolidated statements of income:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

( in thousands) Classification 2022 2021 2022 2021

2 unchanged sentences

(1) Includes short-term leases and variable lease costs, which are immaterial .

The following table presents the balance and classifications of our right of use assets and lease liabilities included in our condensed consolidated balance sheet at June 30, 2022 and December 31, 2021:

(in thousands) Balance sheet classification June 30, 2022 December 31, 2021

The following table presents the balance and classifications of our right of use assets and lease liabilities included in our condensed consolidated balance sheet at September 30, 2022 and December 31, 2021:

(in thousands) Balance sheet classification September 30, 2022 December 31, 2021

Operating lease assets Operating lease right-of-use assets $ 14,916 $ 10,139

2 unchanged sentences

Total lease liabilities $ 15,501 $ 10,567

The following table presents our weighted-average remaining lease terms and weighted-average discount rates for our operating and financing leases at June 30, 2022 and December 31, 2021:

June 30, 2022 December 31, 2021

The following table presents our weighted-average remaining lease terms and weighted-average discount rates for our operating and financing leases at September 30, 2022 and December 31, 2021:

September 30, 2022 December 31, 2021

Weighted-average remaining lease term ( in years )

2 unchanged sentences

Operating leases 3.4 % 3.6 %

The following table presents additional information related to cash paid for amounts included in the measurement of lease liabilities included in our condensed consolidated statements of cash flows as of June 30, 2022 and 2021:

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2022 2021

Operating cash flows from operating leases $ 2,124 $ 1,399

The following table presents the future undiscounted maturities of our operating and financing leases at June 30, 2022 and for each of the next five years and thereafter:

The following table presents the future undiscounted maturities of our operating and financing leases at September 30, 2022 and for each of the next five years and thereafter:

(in thousands) Operating

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements