CHESAPEAKE UTILITIES CORP

Previous wording

We make statements in this Quarterly Report on Form 10-Q (this "Quarterly Report") that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. One can typically identify forward-looking statements by the use of forward-looking words, such as “project,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “continue,” “potential,” “forecast” or other similar words, or future or conditional verbs such as “may,” “will,” “should,” “would” or “could.” These statements represent our intentions, plans, expectations, assumptions and beliefs about future financial performance, business strategy, projected plans and objectives of the Company. Forward-looking statements speak only as of the date they are made or as of the date indicated and we do not undertake any obligation to update forward-looking statements as a result of new information, future events or otherwise. These statements are subject to many risks and uncertainties. In addition to the risk factors described under Item 1A., Risk Factors in our 2025 Annual Report on Form 10-K, the following important factors, among others, could cause actual future results to differ materially from those expressed in the forward-looking statements:

Current wording

We make statements in this Quarterly Report on Form 10-Q (this "Quarterly Report") that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. One can typically identify forward-looking statements by the use of forward-looking words, such as “project,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “continue,” “potential,” “future,” “forecast” or other similar words, or future or conditional verbs such as “may,” “will,” “should,” “would” or “could.” These statements represent our intentions, plans, expectations, assumptions and beliefs about future financial performance, business strategy, projected plans and objectives of the Company. Forward-looking statements speak only as of the date they are made or as of the date indicated and we do not undertake any obligation to update forward-looking statements as a result of new information, future events or otherwise. These statements are subject to many risks and uncertainties. In addition to the risk factors described under Item 1A., Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, as such factors may be updated or supplemented by other periodic reports that we will file in the future with the SEC. In addition to such risk factors, the following important factors, among others, could cause actual future results to differ materially from those expressed in the forward-looking statements:

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•the outcomes of regulatory, environmental and legal matters, including whether pending matters are resolved within current estimates and within expected times, and whether the related costs are adequately covered by insurance or recoverable in rates;

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•the outcomes of regulatory, environmental and legal matters, including whether pending matters are resolved within current estimates and within expected timeframes, and whether the related costs are adequately covered by insurance or recoverable in rates;

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•changes in the current political environment, including the effects the Presidential administration could have on energy policy, the economy and consumer confidence;

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•changes in the current political or regulatory environment, including the effects the Presidential administration could have on energy policy, the economy and consumer confidence;

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•issues relating to the implementation and effective use of technologies to support our business, including artificial intelligence;

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•issues relating to the implementation and effective use of technologies to support our business, including artificial intelligence and risks associated with the use or integration of third-party artificial intelligence technologies, including unintended or unpredictable autonomous actions and circumvention of established security controls;

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•the effect of spot, forward and future market prices on our various energy businesses;

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•the effect of spot, forward and futures market prices on our various energy businesses;

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•the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; and

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•the effect of accounting pronouncements issued periodically by accounting standard-setting bodies;

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•the impacts associated with a pandemic, including the duration and scope of the pandemic the corresponding impact on our supply chains, our personnel, our contract counterparties, general economic conditions and growth, the financial markets and any costs to comply with governmental mandates.

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•the impacts associated with a pandemic, including the duration and scope of the pandemic, the corresponding impact on our supply chains, our personnel, our contract counterparties, general economic conditions and growth, the financial markets and any costs to comply with governmental mandates; and

Previous wording

In July 2026, the Company announced the Florida Energy Pathway ("FEP"), an intrastate natural gas transportation project to be developed, constructed and operated by Peninsula Pipeline. The project is currently contemplated as a 24-inch pipeline extending from Palm Beach County to Miami-Dade County and is intended to increase natural gas transportation capacity, enhance system reliability and support continued residential and commercial growth in south Florida. The Company has secured firm transportation commitments totaling approximately 250,000 Dts/d from multiple investment-grade shippers and continues to solicit additional binding commitments. Total project investment is currently estimated at approximately $1.2 billion, subject to final engineering, design, permitting, regulatory approvals, and other development activities. Subject to the satisfaction of these conditions and final commissioning, the project is anticipated to be in service in 2030. The Company is evaluating financing alternatives, including the potential participation of one or more third parties that may collectively own up to 49 percent of the project.

Current wording

In July 2026, the Company announced the FEP project, an intrastate natural gas transmission infrastructure project designed to support South Florida’s growing energy needs to be undertaken by Peninsula Pipeline on behalf of FEP which will own the FEP Project. The FEP Project is anticipated to be a 24-inch pipeline constructed from Palm Beach County to Miami-Dade County and is designed to expand natural gas transportation capacity, address regional supply constraints, meet growing customer demand, and enhance energy reliability in one of the nation’s fastest-growing regions. On September 1, 2026, NEER acquired a 49 percent membership interest in FEP and PPH retained a 51 percent membership interest. FEP and Peninsula Pipeline have entered into a Construction, Operations, and Management Agreement dated as of September 1, 2026, pursuant to which Peninsula Pipeline will provide certain services related to the development, construction, marketing and operation of the FEP Project. Firm transportation commitments totaling approximately 250,000 Dts/d from multiple investment-grade shippers have been secured and additional binding commitments continue to be solicited. Total project investment is currently estimated at approximately $1.2 billion, pending finalization of design and development activities. Construction is expected to begin during the first half of 2028, and the project is anticipated to be in-service in 2030, subject to final commissioning.

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The following tables reconcile Gross Margin, Net Income, and EPS, all as defined under GAAP, to our non-GAAP financial measures of Adjusted Gross Margin, Adjusted Net Income and Adjusted EPS for the three and six months ended June 30, 2026 and 2025:

Current wording

The following tables reconcile Gross Margin, Net Income, and EPS, all as defined under GAAP, to our non-GAAP financial measures of Adjusted Gross Margin, Adjusted Net Income and Adjusted EPS for the three and nine months ended September 30, 2026 and 2025:

Previous wording

Gross Margin (GAAP) for the Regulated Energy segment for the quarter ended June 30, 2026 was $91.9 million, an increase of $5.6 million, or 6.5 percent, compared to the same period in 2025. The increase in gross margin largely reflects incremental margin attributable to pipeline expansion projects, organic growth in our natural gas distribution businesses and regulatory infrastructure programs.

Current wording

Gross Margin (GAAP) for the Regulated Energy segment for the quarter ended September 30, 2026 was $91.9 million, an increase of $8.0 million, or 9.5 percent, compared to the same period in 2025. The increase in gross margin largely reflects incremental margin attributable to regulatory initiatives and infrastructure programs, pipeline expansion projects, higher consumption volumes and organic growth in our natural gas distribution businesses.

Previous wording

Gross Margin (GAAP) for the Regulated Energy segment for the six months ended June 30, 2026 was $206.8 million, an increase of $23.3 million, or 12.7 percent, compared to the same period in 2025. The increase in gross margin largely reflects incremental margin attributable to pipeline expansion projects, regulatory initiatives and infrastructure programs, and organic growth in our natural gas distribution businesses.

Current wording

Gross Margin (GAAP) for the Regulated Energy segment for the nine months ended September 30, 2026 was $298.7 million, an increase of $31.3 million, or 11.7 percent, compared to the same period in 2025. The increase in gross margin largely reflects incremental margin attributable to pipeline expansion projects, regulatory initiatives and infrastructure programs, organic growth in our natural gas distribution businesses and higher consumption volumes compared to the prior year.

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Gross Margin (GAAP) for the Unregulated Energy segment for the quarter ended June 30, 2026 was $9.4 million, a slight decrease compared to the same period in 2025. The decrease in gross margin was primarily attributable to lower volumes associated with our CNG, RNG and LNG transportation and hold services partially offset by improved margins from our propane distribution business.

Current wording

Gross Margin (GAAP) for the Unregulated Energy segment for the nine months ended September 30, 2026 was $57.3 million, a slight decrease compared to the same period in 2025. The decrease in gross margin was primarily attributable to lower total margins associated with our CNG, RNG and LNG transportation and hold services, partially offset by improved margins from our propane distribution business and increased performance from Aspire Energy.

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Net income (GAAP) for the quarter ended June 30, 2026 was $25.4 million, or $1.05 per share, compared to $23.9 million, or $1.02 per share, for the same quarter of 2025. Net income for the three months ended June 30, 2025 included $0.4 million of transaction and transition-related expenses in connection with the acquisition and integration of FCG. Excluding these costs, net income increased by $1.1 million or 4.5 percent compared to the prior-year period.

Current wording

Net income (GAAP) for the quarter ended September 30, 2026 was $21.6 million, or $0.89 per share, compared to $19.4 million, or $0.82 per share, for the same quarter of 2025. Net income for the three months ended September 30, 2025 included $0.1 million of transaction and transition-related expenses in connection with the acquisition and integration of FCG. Excluding these costs, adjusted net income increased by $2.1 million or 10.8 percent compared to the prior-year period.

Previous wording

Net income (GAAP) for the six months ended June 30, 2026 was $84.7 million, or $3.51 per share, compared to $74.8 million, or $3.22 per share, for the same period of 2025. Net income for the six months ended June 30, 2025 included $0.6 million of transaction and transition-related expenses in connection with the acquisition and integration of FCG. Excluding these costs, net income increased by $9.3 million or 12.3 percent compared to the prior-year period.

Current wording

Net income (GAAP) for the nine months ended September 30, 2026 was $106.3 million, or $4.40 per share, compared to $94.2 million, or $4.03 per share, for the same period of 2025. Net income for the nine months ended September 30, 2025 included $0.7 million of transaction and transition-related expenses in connection with the acquisition and integration of FCG. Excluding these costs, adjusted net income increased by $11.4 million or 12.0 percent compared to the prior-year period.

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Results of Operations for the Three and Six Months Ended June 30, 2026

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Results of Operations for the Three and Nine Months Ended September 30, 2026

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Our adjusted net income for the three months ended June 30, 2026 was $25.4 million, or $1.05 per share, compared to $24.3 million, or $1.04 per share, for the same quarter in 2025. Operating income for the second quarter of 2026 was $52.9 million, an increase of $2.6 million compared to the same period in 2025. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $2.1 million or 4.1 percent compared to the prior-year period. The increase in adjusted gross margin in the second quarter of 2026 was primarily driven by incremental margin from pipeline expansion projects, regulatory infrastructure programs, natural gas organic growth, and improved margins from our propane distribution business. These factors were partially offset by decreased customer consumption, lower total margins associated with our CNG, RNG and LNG transportation and hold services, and increased operating expenses compared to the prior-year period. Higher operating expenses were largely driven by increased depreciation, amortization and property taxes, payroll, benefits and other employee-related expenses, credit, collections and customer service costs, and higher facilities, maintenance costs and outside services compared to the prior-year period. Depreciation, amortization and property taxes increased during the current period attributable to growth partially offset by the impact of the FCG depreciation study and the absence of a regulatory item compared to the prior-year period. Current period margin and expenses include offsetting reductions in both adjusted gross margin and depreciation and amortization expense related to the absence of recovered costs associated with Hurricane Michael.

Current wording

Our adjusted net income for the three months ended September 30, 2026 was $21.6 million, or $0.89 per share, compared to $19.5 million, or $0.82 per share, for the same quarter in 2025. Operating income for the third quarter of 2026 was $48.6 million, an increase of $3.6 million compared to the same period in 2025. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, adjusted operating income increased $3.4 million or 7.6 percent compared to the prior-year period. The increase in adjusted gross margin in the third quarter of 2026 was primarily driven by incremental margin from regulatory initiatives and infrastructure programs, pipeline expansion projects, increased customer consumption, improved contributions from our unregulated businesses and natural gas organic growth. These factors were partially offset by lower total margins associated with our CNG, RNG and LNG transportation and hold services. Higher operating expenses were largely driven by increased payroll, benefits and other employee-related expenses, higher facilities, maintenance costs and outside services, increased depreciation, amortization and property taxes and higher vehicle expenses and insurance costs. These amounts were partially offset by lower expenses associated with credit, collections and customer service costs compared to the prior-year period. Depreciation, amortization and property taxes increased during the current period attributable to growth partially offset by the impact of the FCG depreciation study and the absence of a regulatory item compared to the prior-year period. Current period margin and expenses include offsetting reductions in both adjusted gross margin and depreciation and amortization expense related to the absence of recovered costs associated with Hurricane Michael.

Previous wording

Key variances between the second quarter of 2025 and 2026 included:

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Key variances between the third quarter of 2025 and 2026 included:

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Our adjusted net income for the six months ended June 30, 2026 was $84.7 million, or $3.51 per share, compared to $75.4 million, or $3.25 per share, for the same period in 2025. Operating income for the first six months of 2026 was $152.3 million, an increase of $15.2 million compared to the same period in 2025. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $14.4 million or 10.4 percent compared to the prior-year period. The increase in adjusted gross margin in the first half of 2026 was primarily driven by incremental margin from regulatory initiatives and infrastructure programs, pipeline expansion projects and natural gas organic growth, improved performance from Aspire Energy and our propane distribution business, and increased customer consumption compared to the prior-year period. These factors were partially offset by lower total margins associated with our CNG, RNG and LNG transportation and hold services and higher operating expenses compared to the prior-year period. The increase in operating expenses was primarily attributable to higher payroll, benefits and other employee-related expenses, depreciation, amortization and property taxes, facilities, maintenance costs and outside services, and increased credit, collections and customer service costs compared to the prior-year period. Depreciation, amortization and property taxes increased during the current period attributable to growth partially offset by the impact of the FCG depreciation study and the absence of a regulatory item compared to the prior-year period. Current period margin and expenses include offsetting reductions in both adjusted gross margin and depreciation and amortization expense related to the absence of recovered costs associated with Hurricane Michael.

Current wording

Our adjusted net income for the nine months ended September 30, 2026 was $106.3 million, or $4.40 per share, compared to $94.9 million, or $4.06 per share, for the same period in 2025. Operating income for the first nine months of 2026 was $200.9 million, an increase of $18.8 million compared to the same period in 2025. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, adjusted operating income increased $17.8 million or 9.8 percent compared to the prior-year period. The increase in adjusted gross margin in the first nine months of 2026 was primarily driven by incremental margin from regulatory initiatives and infrastructure programs, pipeline expansion projects, natural gas organic growth, improved contributions from our unregulated businesses and increased customer consumption compared to the prior-year period. These factors were partially offset by lower total margins associated with our CNG, RNG and LNG transportation and hold services compared to the prior-year period. The increase in operating expenses was primarily attributable to higher payroll, benefits and other employee-related expenses, increased depreciation, amortization and property taxes, higher facilities, maintenance costs and outside services, higher vehicle expenses and insurance costs, and increased credit, collections and customer service costs compared to the prior-year period. Depreciation, amortization and property taxes increased during the current period attributable to growth partially offset by the impact of the FCG depreciation study and the absence of a regulatory item compared to the prior-year period. Current period margin and expenses include offsetting reductions in both adjusted gross margin and depreciation and amortization expense related to the absence of recovered costs associated with Hurricane Michael.

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Key variances between the six months ended June 30, 2025 and June 30, 2026 included:

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Key variances between the nine months ended September 30, 2025 and September 30, 2026 included:

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We continuously pursue and develop additional projects and regulatory initiatives to serve existing and new customers, further grow our businesses and earnings, and increase shareholder value. The following table includes all major projects and initiatives that are currently underway or recently completed. Our practice is to add incremental margin associated with new projects and regulatory initiatives to this table once negotiations or details are substantially final and/or the associated earnings can be estimated. Major projects and initiatives that have generated consistent year-over-year adjusted gross margin contributions are removed from the table at the beginning of the next calendar year.

Current wording

We continuously pursue and develop additional projects and regulatory initiatives to serve existing and new customers, further grow our businesses and earnings, and increase shareholder value. The following table includes all major projects and initiatives that are currently underway or recently completed (except for the FEP Project which is discussed elsewhere in this report). Our practice is to add incremental margin associated with new projects and regulatory initiatives to this table once negotiations or details are substantially final and/or the associated earnings can be estimated. Major projects and initiatives that have generated consistent year-over-year adjusted gross margin contributions are removed from the table at the beginning of the next calendar year.

Previous wording

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of an amendment to its Transportation Service Agreement with FPU for a project that will support additional supply to communities in the St. Cloud, Florida area. The project is driven by the need to expand gas service to future communities that are expected in that area. Peninsula Pipeline will construct pipeline expansions that will allow FPU to serve the expected new growth. The expansion will provide FPU with an additional 10,000 Dts/d. The Florida PSC approved the project in May 2024, and it is expected to be complete in the third quarter of 2026. For the three and six months ended June 30, 2026, these projects generated incremental adjusted gross margin of $0.2 million and $1.1 million, respectively. We expect this expansion to generate approximately $3.2 million in 2026 and annually thereafter.

Current wording

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of an amendment to its Transportation Service Agreement with FPU for a project that will support additional supply to communities in the St. Cloud, Florida area. The project is driven by the need to expand gas service to future communities that are expected in that area. Peninsula Pipeline will construct pipeline expansions that will allow FPU to serve the expected new growth. The expansion will provide FPU with an additional 10,000 Dts/d. The Florida PSC approved the project in May 2024, and it is expected to be completed in the second quarter of 2027. We expect this expansion to generate approximately $3.2 million in 2026 and annually thereafter. For the nine months ended September 30, 2026, these projects generated incremental adjusted gross margin of $1.1 million.

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In August 2022, Peninsula Pipeline and FPU filed a joint petition with the Florida PSC for approval of its Transportation Service Agreement associated with the Wildlight planned community located in Nassau County, Florida. The project enables us to meet the significant growing demand for service in Yulee, Florida. The agreement enables us to construct the project during the build-out of the community and charge the reservation rate as each phase of the project goes into service. Construction of the pipeline facilities will occur in two separate phases. Phase one consists of three extensions with associated facilities, and a gas injection interconnect with associated facilities. Phase two will consist of two additional pipeline extensions. The petition was approved by the Florida PSC in November 2022. The various phases of the project commenced in the first quarter of 2023, and construction was completed in 2025. The project generated incremental adjusted gross margin of $0.6 million and $1.2 million, respectively, for the three and six months ended June 30, 2026 and is expected to contribute adjusted gross margin of approximately $4.3 million in 2026 and annually thereafter.

Current wording

In August 2022, Peninsula Pipeline and FPU filed a joint petition with the Florida PSC for approval of its Transportation Service Agreement associated with the Wildlight planned community located in Nassau County, Florida. The project enables us to meet the significant growing demand for service in Yulee, Florida. The agreement enables us to construct the project during the build-out of the community and charge the reservation rate as each phase of the project goes into service. Construction of the pipeline facilities occurred in two separate phases. Phase one consisted of three extensions with associated facilities, and a gas injection interconnect with associated facilities. Phase two consisted of two additional pipeline extensions. The petition was approved by the Florida PSC in November 2022. The various phases of the project commenced in the first quarter of 2023, and construction was completed in 2025. The project generated incremental adjusted gross margin of $0.6 million and $1.8 million, respectively, for the three and nine months ended September 30, 2026 and is expected to contribute adjusted gross margin of approximately $4.3 million in 2026 and annually thereafter.

Previous wording

In June 2025, Eastern Shore filed a limited amended application with the FERC requesting revised initial transportation rates for the project. The revised rates reflected increased capital costs associated with unanticipated changes in global markets and supply chains, including the availability of skilled laborers with the requisite certifications to work on this project. Eastern Shore requested expedited action by the FERC in relation to this matter and an approved order was issued in July 2025. Construction commenced shortly after approval and is well underway. The weather during the first quarter of 2026 resulted in several brief slowdowns which had a cumulative impact on the overall timeline. Project construction and commissioning are expected to be complete in the latter part of the year with the FERC approval process to immediately follow. The Company expects to receive full approval for in-service of the facility by the beginning of 2027. The project generated adjusted gross margin of $0.4 million and $0.8 million, respectively, for the three and six months ended June 30, 2026. The project is expected to contribute adjusted gross margin of approximately $1.5 million in 2026 and $17.1 million in 2027 and annually thereafter.

Current wording

In June 2025, Eastern Shore filed a limited amended application with the FERC requesting revised initial transportation rates for the project. The revised rates reflected increased capital costs associated with unanticipated changes in global markets and supply chains, including the availability of skilled laborers with the requisite certifications to work on this project. Eastern Shore requested expedited action by the FERC in relation to this matter and an approved order was issued in July 2025. Construction commenced shortly after approval and is well underway. The weather during the first quarter of 2026 resulted in several brief slowdowns which had a cumulative impact on the overall timeline. In August 2026, Eastern Shore filed updated tariff rates for the project with the FERC and expects a decision on the filing during the fourth quarter of 2026. Mechanical and electrical construction are expected to be complete in the latter part of the year with the FERC commissioning process to immediately follow. The Company expects the facility to be in service within the first quarter of 2027. The project generated adjusted gross margin of $0.4 million and $1.2 million, respectively, for the three and nine months ended September 30, 2026. The project is expected to contribute adjusted gross margin of approximately $1.5 million in 2026 and $17.2 million in 2027 and annually thereafter.

Previous wording

In December 2023, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities on the East Coast of Florida. The projects are driven by the need for increased supply to coastal portions of the state that have experienced an increase in population growth. Peninsula Pipeline will construct several pipeline extensions which will support FPU’s distribution system in the areas of Boynton Beach and New Smyrna Beach with an additional 15,000 Dts/d and 3,400 Dts/d, respectively. The Florida PSC approved the projects in March 2024. New Smyrna Beach was placed into service during May 2025 and construction is projected to be complete for Boynton Beach in the third quarter of 2026. The projects generated incremental adjusted gross margin of $0.3 million and $1.3 million, respectively, for the three and six months ended June 30, 2026, and are expected to contribute adjusted gross margin of approximately $6.0 million in 2026 and annually thereafter.

Current wording

In December 2023, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities on the East Coast of Florida. The projects are driven by the need for increased supply to coastal portions of the state that have experienced an increase in population growth. Peninsula Pipeline will construct several pipeline extensions which will support FPU’s distribution system in the areas of Boynton Beach and New Smyrna Beach with an additional 15,000 Dts/d and 3,400 Dts/d, respectively. The Florida PSC approved the projects in March 2024. New Smyrna Beach was placed into service during May 2025 and construction is projected to be completed for Boynton Beach in the fourth quarter of 2026. The projects generated incremental adjusted gross margin of $1.3 million for the nine months ended September 30, 2026, and are expected to contribute adjusted gross margin of approximately $6.0 million in 2026 and annually thereafter.

Previous wording

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities located in Central Florida. The projects are driven by the need for increased supply to communities in central Florida that are experiencing significant population growth. Peninsula Pipeline's extensions support FPU’s distribution system around the Plant City and Lake Mattie area's of Florida with an additional 5,000 Dts/d and 8,700 Dts/d, respectively. The Florida PSC approved the projects in March 2024. The Plant City project was completed in the fourth quarter of 2024, and the Lake Mattie project went into service in July 2025. These projects generated incremental adjusted gross margin of $0.8 million and $1.6 million, respectively, for the three and six months ended June 30, 2026, and are expected to contribute total adjusted gross margin of approximately $4.3 million in 2026 and annually thereafter.

Current wording

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of its Transportation Service Agreements with FPU for projects that will support additional supply to communities located in Central Florida. The projects are driven by the need for increased supply to communities in central Florida that are experiencing significant population growth. Peninsula Pipeline's extensions support FPU’s distribution system around the Plant City and Lake Mattie area's of Florida with an additional 5,000 Dts/d and 8,700 Dts/d, respectively. The Florida PSC approved the projects in March 2024. The Plant City project was completed in the fourth quarter of 2024, and the Lake Mattie project went into service in July 2025. These projects generated incremental adjusted gross margin of $0.2 million and $1.8 million, respectively, for the three and nine months ended September 30, 2026, and are expected to contribute total adjusted gross margin of approximately $4.3 million in 2026 and annually thereafter.

Previous wording

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of Transportation Service Agreements with FCG for projects that will support the transportation of additional renewable energy supply to FCG. The projects, located in Florida’s Brevard, Indian River and Miami-Dade counties, will bring renewable natural gas produced from local landfills into FCG’s natural gas distribution system. Peninsula Pipeline will construct several pipeline extensions which will support FCG's distribution system in Brevard County, Indian River County, and Miami-Dade County. Benefits of these projects include increased gas supply to serve expected FCG growth, strengthened system reliability and additional system flexibility. The Florida PSC approved the petition at its July 2024 meeting. In October 2025, the Florida PSC approved amendments to the Transportation Service Agreements that were filed to include Peninsula Pipeline as a party to the related interconnection agreements. The projects are underway and are estimated to be completed in the second half of 2026. These three renewable projects generated incremental adjusted gross margin of $0.7 million and $2.0 million, respectively, for the three and six months ended June 30, 2026, and are projected to generate total adjusted gross margin of approximately $5.4 million in 2026 and $6.4 million annually thereafter.

Current wording

In February 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of Transportation Service Agreements with FCG for projects that will support the transportation of additional renewable energy supply to FCG. The projects, located in Florida’s Brevard, Indian River and Miami-Dade counties, will bring renewable natural gas produced from local landfills into FCG’s natural gas distribution system. Peninsula Pipeline will construct several pipeline extensions which will support FCG's distribution system in Brevard County, Indian River County, and Miami-Dade County. Benefits of these projects include increased gas supply to serve expected FCG growth, strengthened system reliability and additional system flexibility. The Florida PSC approved the petition at its July 2024 meeting. In October 2025, the Florida PSC approved amendments to the Transportation Service Agreements that were filed to include Peninsula Pipeline as a party to the related interconnection agreements. The projects are underway and are estimated to be completed in the first of 2027. These three renewable projects generated incremental adjusted gross margin of $0.7 million and $2.7 million, respectively, for the three and nine months ended September 30, 2026, and are projected to generate total adjusted gross margin of approximately $5.4 million in 2026 and $6.4 million annually thereafter.

Previous wording

In September 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of the Transportation Service Agreement with FCG for a series of projects that will enhance gas infrastructure in Miami-Dade County. The proposed expansion consists of the development of several pipeline projects to support growth and FCG's distribution system, as well as enhance FCG's access to gas from various points in the Miami-Dade County area. The expansion was approved in February 2025 and interim services began in August 2025 with permanent facilities expected to be in service by the second half of 2026. The project generated adjusted gross margin of $1.9 million and $3.8 million, respectively, for the three and six months ended June 30, 2026, and is expected to contribute adjusted gross margin of approximately $7.6 million in 2026 and annually thereafter.

Current wording

In September 2024, Peninsula Pipeline filed a petition with the Florida PSC for approval of the Transportation Service Agreement with FCG for a series of projects that will enhance gas infrastructure in Miami-Dade County. The proposed expansion consists of the development of several pipeline projects to support growth and FCG's distribution system, as well as enhance FCG's access to gas from various points in the Miami-Dade County area. The expansion was approved in February 2025 and interim services began in August 2025 with permanent facilities expected to be in service by the fourth quarter of 2026. The project generated adjusted gross margin of $1.0 million and $4.8 million, respectively, for the three and nine months ended September 30, 2026, and is expected to contribute adjusted gross margin of approximately $7.6 million in 2026 and annually thereafter.

Previous wording

In February 2023, FPU filed a petition with the Florida PSC for approval of the GUARD program. GUARD is a ten-year program to enhance the safety, reliability, and accessibility of portions of our natural gas distribution system. We identified various categories of projects to be included in GUARD, which include the relocation of mains and service lines located in rear easements and other difficult to access areas to the front of the street, the replacement of problematic distribution mains, service lines, and maintenance and repair equipment and system reliability projects. In August 2023, the Florida PSC approved the GUARD program, which included $205.0 million of capital expenditures projected to be spent over a 10-year period. For the three and six months ended June 30, 2026, there was $0.9 million and $1.8 million, respectively, of incremental adjusted gross margin generated pursuant to the program. The program is expected to generate $10.9 million of adjusted gross margin in 2026 and $13.0 million in 2027.

Current wording

In February 2023, FPU filed a petition with the Florida PSC for approval of the GUARD program. GUARD is a ten-year program to enhance the safety, reliability, and accessibility of portions of our natural gas distribution system. We identified various categories of projects to be included in GUARD, which include the relocation of mains and service lines located in rear easements and other difficult to access areas to the front of the street, the replacement of problematic distribution mains, service lines, and maintenance and repair equipment and system reliability projects. In August 2023, the Florida PSC approved the GUARD program, which included $205.0 million of capital expenditures projected to be spent over a 10-year period. For the three and nine months ended September 30, 2026, there was $1.0 million and $2.8 million, respectively, of incremental adjusted gross margin generated pursuant to the program. The program is expected to generate $10.9 million of adjusted gross margin in 2026 and $13.0 million in 2027.

Previous wording

In June 2023, the Florida PSC issued the approval order for the continuation of the SAFE program beyond its 2025 expiration date and inclusion of 150 miles of additional mains and services located in rear property easements. The SAFE program is designed to relocate certain mains and facilities associated with rear lot easements to street front locations to improve FCG's ability to inspect and maintain the facilities and reduce opportunities for damage and theft. In the same order, the Florida PSC approved a replacement of 160 miles of pipe that was used in the 1970s and 1980s and shown through industry research to exhibit premature failure in the form of cracking. The program includes projected capital expenditures of $205.0 million over a 10-year period. For the three and six months ended June 30, 2026, there was $0.7 million and $1.8 million, respectively, of incremental adjusted gross margin generated pursuant to the program. The program is expected to generate $12.7 million of adjusted gross margin in 2026 and $16.4 million in 2027.

Current wording

In June 2023, the Florida PSC issued the approval order for the continuation of the SAFE program beyond its 2025 expiration date and inclusion of 150 miles of additional mains and services located in rear property easements. The SAFE program is designed to relocate certain mains and facilities associated with rear lot easements to street front locations to improve FCG's ability to inspect and maintain the facilities and reduce opportunities for damage and theft. In the same order, the Florida PSC approved a replacement of 160 miles of pipe that was used in the 1970s and 1980s and shown through industry research to exhibit premature failure in the form of cracking. The program includes projected capital expenditures of $205.0 million over a 10-year period. For the three and nine months ended September 30, 2026, there was $1.0 million and $2.8 million, respectively, of incremental adjusted gross margin generated pursuant to the program. The program is expected to generate $12.7 million of adjusted gross margin in 2026 and $16.4 million in 2027.

Previous wording

In March 2026, Eastern Shore submitted an annual true-up filing with the FERC regarding a capital cost surcharge to recover capital costs associated with the replacement of existing Eastern Shore facilities because of mandated highway relocation projects as well as compliance with a PHMSA regulation. The capital cost surcharge mechanism was approved in Eastern Shore's last rate case. There was a slight decrease to the revenue requirement of the currently effective surcharge as a result of the true-up. The FERC approved the surcharge as filed effective April 1, 2026. For the three and six months ended June 30, 2026, there was $0.9 million and $1.7 million, respectively, of incremental adjusted gross margin generated pursuant to the program. Eastern Shore expects to generate adjusted gross margin of approximately$9.0 million in 2026 and$10.1 million in 2027 from relocation projects, which is ultimately dependent upon the timing of filings and the completion of construction.

Current wording

In March 2026, Eastern Shore submitted an annual true-up filing with the FERC regarding a capital cost surcharge to recover capital costs associated with the replacement of existing Eastern Shore facilities because of mandated highway relocation projects as well as compliance with a PHMSA regulation. The capital cost surcharge mechanism was approved in Eastern Shore's last rate case. There was a slight decrease to the revenue requirement of the currently effective surcharge as a result of the true-up. The FERC approved the surcharge as filed effective April 1, 2026. For the three and nine months ended September 30, 2026, there was $0.8 million and $2.5 million, respectively, of incremental adjusted gross margin generated pursuant to the program. Eastern Shore expects to generate adjusted gross margin of approximately$9.0 million in 2026 and$10.1 million in 2027 from relocation projects, which is ultimately dependent upon the timing of filings and the completion of construction.

Previous wording

In 2020, the Florida PSC implemented the Storm Protection Plan ("SPP") and Storm Protection Plan Cost Recovery Clause ("SPPCRC"), 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 and SPPCRC were filedand approved in 2022, with modifications, by the Florida PSC. Rates associated with this initiative were effective in January 2023. In October 2024, the Florida PSC approved the Company's projected 2025 SPP costs of$20.4 million for both capital and operating expenses. Our Florida electric distribution operations filed an updated SPP plan in January 2025 which was approved in June 2025, with modifications by the Florida PSC. For the three and six months ended June 30, 2026, this initiative generated additional adjusted gross margin of $0.3 million and $2.5 million, respectively, and is expected to generate$9.7 million of adjusted gross margin in 2026 and$10.4 million in 2027. We expect continued investment under the SPP going forward.

Current wording

In 2020, the Florida PSC implemented the Storm Protection Plan ("SPP") and Storm Protection Plan Cost Recovery Clause ("SPPCRC"), 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 and SPPCRC were filedand approved in 2022, with modifications, by the Florida PSC. Rates associated with this initiative were effective in January 2023. In October 2024, the Florida PSC approved the Company's projected 2025 SPP costs of$20.4 million for both capital and operating expenses. Our Florida electric distribution operations filed an updated SPP plan in January 2025 which was approved in June 2025, with modifications by the Florida PSC. For the three and nine months ended September 30, 2026, this initiative generated additional adjusted gross margin of $0.4 million and $2.9 million, respectively, and is expected to generate $9.7 million of adjusted gross margin in 2026 and $10.4 million in 2027. We expect continued investment under the SPP going forward.

Previous wording

In October 2025, FPU and FCG filed a joint petition for approval to establish a recovery surcharge for actual, estimated and projected relocation costs pursuant to the Florida Administrative Code which enables companies to recover the costs associated with relocating or reconstructing facilities that have been required by governmental entities. The Florida PSC approved the petition in February 2026, with the surcharge effective in March 2026. For the three and six months ended June 30, 2026, there was $0.4 million and $0.9 million, respectively, of adjusted gross margin generated. The projected total revenue for both 2026 and 2027 is $0.5 million for FPU and $1.0 million for FCG.

Current wording

In October 2025, FPU and FCG filed a joint petition for approval to establish a recovery surcharge for actual, estimated and projected relocation costs pursuant to the Florida Administrative Code which enables companies to recover the costs associated with relocating or reconstructing facilities that have been required by governmental entities. The Florida PSC approved the petition in February 2026, with the surcharge effective in March 2026. For the nine months ended September 30, 2026, there was $0.5 million of adjusted gross margin generated. The projected total revenue for both 2026 and 2027 is approximately $0.6 million.

Previous wording

In January 2024, our natural gas distribution businesses in Maryland, CUC-Maryland Division, Sandpiper Energy, Inc., and Elkton Gas Company (collectively, the “Maryland natural gas distribution businesses”) filed a joint application for a natural gas rate case with the Maryland PSC. In connection with the application, we sought approval of the following: (i) permanent rate relief of approximately $6.9 million with a ROE of 11.5 percent; (ii) authorization to make certain changes to tariffs to include a unified rate structure and to consolidate the Maryland natural gas distribution businesses; and (iii) authorization to establish a rider for recovery of the costs associated with our new technology systems. In September 2024, the Maryland Public Utility Judge approved a $2.6 million increase in annual base rates, which was followed by the Company submitting a Phase II filing in November 2024 to determine rate design across the Maryland natural gas distribution businesses, consolidation of the applicable tariffs and recovery of technology costs. In March 2025, the Phase II was approved, including an additional $0.9 million in revenue requirement, for a total cumulative increase of $3.5 million. A final order was issued in April 2025 and included approval of the consolidation of the operations and the assets of CUC-Maryland Division, Sandpiper Energy, and Elkton Gas into one entity which was renamed and operates as Chesapeake Utilities of Maryland, Inc. For the three and six months ended June 30, 2026, there was $0.1 million and $1.4 million, respectively, of incremental adjusted gross margin generated and the proceeding is expected to result in additional adjusted gross margin of approximately $3.5 million in 2026 and 2027.

Current wording

In January 2024, our natural gas distribution businesses in Maryland, CUC-Maryland Division, Sandpiper Energy, Inc., and Elkton Gas Company (collectively, the “Maryland natural gas distribution businesses”) filed a joint application for a natural gas rate case with the Maryland PSC. In connection with the application, we sought approval of the following: (i) permanent rate relief of approximately $6.9 million with a ROE of 11.5 percent; (ii) authorization to make certain changes to tariffs to include a unified rate structure and to consolidate the Maryland natural gas distribution businesses; and (iii) authorization to establish a rider for recovery of the costs associated with our new technology systems. In September 2024, the Maryland Public Utility Judge approved a $2.6 million increase in annual base rates, which was followed by the Company submitting a Phase II filing in November 2024 to determine rate design across the Maryland natural gas distribution businesses, consolidation of the applicable tariffs and recovery of technology costs. In March 2025, the Phase II was approved, including an additional $0.9 million in revenue requirement, for a total cumulative increase of $3.5 million. A final order was issued in April 2025 and included approval of the consolidation of the operations and the assets of CUC-Maryland Division, Sandpiper Energy, and Elkton Gas into one entity which was renamed and operates as Chesapeake Utilities of Maryland, Inc. For the three and nine months ended September 30, 2026, there was $0.1 million and $1.5 million, respectively, of incremental adjusted gross margin generated and the proceeding is expected to result in additional adjusted gross margin of approximately $3.5 million in 2026 and 2027.

Previous wording

In August 2024, our Delaware natural gas division filed an application for a natural gas rate case with the Delaware PSC seeking approval of the following: (i) permanent rate relief of approximately $12.1 million with a ROE of 11.5 percent; (ii) proposed changes to depreciation rates which were part of a depreciation study also submitted with the filing; and (iii) authorization to make certain changes to tariffs. Annualized interim rates were approved by the Delaware PSC in the amount of $2.5 million and became effective in October 2024. A settlement among all interested parties was reached and approved by the Delaware PSC in June 2025 providing an annual revenue increase of $6.1 million, as well as dividing the rate case into two phases. Rates set to recover the approved components of the increase were effective in March 2025 and approved tariff-related changes including rate design were effective as of October 15, 2025. For the six months ended June 30, 2026, there was $1.2 million of incremental adjusted gross margin generated and final rates are expected to generate approximately $6.1 million of adjusted gross margin in 2026 and 2027.

Current wording

In August 2024, our Delaware natural gas division filed an application for a natural gas rate case with the Delaware PSC seeking approval of the following: (i) permanent rate relief of approximately $12.1 million with a ROE of 11.5 percent; (ii) proposed changes to depreciation rates which were part of a depreciation study also submitted with the filing; and (iii) authorization to make certain changes to tariffs. Annualized interim rates were approved by the Delaware PSC in the amount of $2.5 million and became effective in October 2024. A settlement among all interested parties was reached and approved by the Delaware PSC in June 2025 providing an annual revenue increase of $6.1 million, as well as dividing the rate case into two phases. Rates set to recover the approved components of the increase were effective in March 2025 and approved tariff-related changes including rate design were effective as of October 15, 2025. For the three and nine months ended September 30, 2026, there was $0.3 million and $1.5 million of incremental adjusted gross margin generated and final rates are expected to generate approximately $6.1 million of adjusted gross margin in 2026 and 2027.

Previous wording

In August 2024, our Florida Electric division filed a petition with the Florida PSC seeking a general base rate increase of $12.6 million with a ROE of 11.3 percent based on a 2025 projected test year. Annualized interim rates of approximately $1.8 million were approved with an effective date of November 1, 2024. In March 2025, the Florida PSC approved the permanent rate increase, but the order was subsequently protested. In May 2025, the Company reached a settlement agreement with the interested parties. This settlement which was approved by the Florida PSC in July 2025, provides for a total base rate increase of approximately $8.6 million on an annual basis, with $1.0 million of the increase deferred from the first year's base rate increase and recovered over three years. A step-up rate increase was also approved for up to $0.7 million, upon completion of the purchase and refurbishment of certain substations, which is expected to be completed in December 2026. For the six months ended June 30, 2026, there was $1.5 million of incremental adjusted gross margin generatedand final rates are expectedto generate approximately $8.6 million of adjusted gross margin in 2026 and $9.1 million in 2027.

Current wording

In August 2024, our Florida Electric division filed a petition with the Florida PSC seeking a general base rate increase of $12.6 million with a ROE of 11.3 percent based on a 2025 projected test year. Annualized interim rates of approximately $1.8 million were approved with an effective date of November 1, 2024. In March 2025, the Florida PSC approved the permanent rate increase, but the order was subsequently protested. In May 2025, the Company reached a settlement agreement with the interested parties. This settlement which was approved by the Florida PSC in July 2025, provides for a total base rate increase of approximately $8.6 million on an annual basis, with $1.0 million of the increase deferred from the first year's base rate increase and recovered over three years. A step-up rate increase was also approved for up to $0.7 million, upon completion of the purchase and refurbishment of certain substations, which is expected to be completed in December 2027. For the nine months ended September 30, 2026, there was $1.5 million of incremental adjusted gross margin generatedand final rates are expectedto generate approximately $8.6 million of adjusted gross margin in 2026 and $9.1 million in 2027.

Previous wording

In April 2026, Florida City Gas filed a petition with the Florida PSC. In connection with the application, we are seeking approval of the following: (i) interim rate relief of approximately $16.2 million, subject to refund, pending the outcome of the rate case proceeding; (ii) general base rate increase of $46.9 million with a ROE of 11.25 percent based on a 2027 projected test year; (iii) reclassification of approximately $16.4 million in the existing SAFE program revenues from surcharge recovery to base rates; (iv) authorization to retain the unamortized portion of the previously approved acquisition adjustment; and (v) further implementation of the advanced metering infrastructure (“AMI”). In July 2026, interim rates of $16.2 million on an annualized basis were approved by the Florida PSC with rates effective July 20, 2026, subject to refund pending the final outcome of the rate case proceeding. The discovery process has commenced, and the hearing for the proceeding is scheduled for late September 2026. The ultimate outcome of the application is subject to review and approval by the Florida PSC.

Current wording

In April 2026, Florida City Gas filed a petition with the Florida PSC. In connection with the application, we are seeking approval of the following: (i) interim rate relief of approximately $16.2 million, subject to refund, pending the outcome of the rate case proceeding; (ii) general base rate increase of $46.9 million with a ROE of 11.25 percent based on a 2027 projected test year; (iii) reclassification of approximately $16.4 million in the existing SAFE program revenues from surcharge recovery to base rates; (iv) authorization to retain the unamortized portion of the previously approved acquisition adjustment; and (v) further implementation of the advanced metering infrastructure (“AMI”). In July 2026, interim rates of $16.2 million on an annualized basis were approved by the Florida PSC with rates effective July 20, 2026, subject to refund pending the final outcome of the rate case proceeding. For both the three and nine months ended September 30, 2026, $2.7 million of margin was generated as a result of interim rates. The hearing for the proceeding was held and concluded on September 30, 2026. The Florida PSC staff is expected to issue its recommendation regarding the revenue requirement mid-November 2026, with staff rate recommendation on rates anticipated in December 2026.

Previous wording

For the six months ended June 30, 2026, increased customer consumption, which includes the effects of colder weather conditions, largely in our Delmarva service areas, compared to the prior-year period resulted in a$1.8 million increase in adjusted gross margin.

Current wording

For the nine months ended September 30, 2026, increased customer consumption, which includes the effects of colder weather conditions, largely in our Delmarva and Ohio service areas, compared to the prior-year period resulted in a$2.6 million increase in adjusted gross margin.

Previous wording

The following table summarizes HDD and CDD variances from the 10-year average HDD/CDD ("Normal") for the three and six months ended June 30, 2026 and 2025.

Current wording

The following table summarizes HDD and CDD variances from the 10-year average HDD/CDD ("Normal") for the three and nine months ended September 30, 2026 and 2025.

Previous wording

The average number of residential customers served on the Delmarva Peninsula increased by approximately 2.8 percent and 3.0 percent, respectively, for the three and six months ended June 30, 2026, while the average number of residential customers served by the Company's Florida natural gas distribution service territories increased by approximately 1.8 percent and 1.9 percent, respectively, for the three and six months ended June 30, 2026.

Current wording

The average number of residential customers served on the Delmarva Peninsula increased by approximately 2.1 percent and 2.7 percent, respectively, for the three and nine months ended September 30, 2026, while the average number of residential customers served by the Company's Florida natural gas distribution service territories increased by approximately 1.4 percent and 1.8 percent, respectively, for the three and nine months ended September 30, 2026.

Previous wording

Operating income for the Regulated Energy segment for the second quarter of 2025 was $55.2 million, an increase of $3.4 million over the same period in 2025. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, operating income increased $2.9 million, or 5.5 percent, compared to the same period in 2025. Higher operating income reflects incremental margin from pipeline expansion projects, regulatory initiatives and infrastructure programs, organic growth in our natural gas distribution businesses and improved margins from our propane distribution business. These factors were partially offset by decreased customer consumption compared to the prior-year period. Excluding the transaction and transition-related expenses described above, the increase in total operating expenses of $4.1 million was largely attributable to additional depreciation, amortization and property taxes associated with growth, higher expenses associated with payroll, benefits and other employee related expenses, and increased costs related to credit, collections and customer service. Depreciation and amortization expense for the current period includes decreases related to certain regulatory items including the absence of recovered costs associated with Hurricane Michael and the impact of the FCG depreciation study.

Current wording

Operating income for the Regulated Energy segment for the third quarter of 2026 was $55.5 million, an increase of $6.6 million over the same period in 2025. Excluding transaction and transition-related expenses associated with the acquisition and integration of FCG, adjusted operating income increased $6.4 million, or 13.0 percent, compared to the same period in 2025. Higher operating income reflects incremental margin from regulatory initiatives and infrastructure programs, pipeline expansion projects, higher consumption volumes and organic growth in our natural gas distribution businesses. Excluding the transaction and transition-related expenses described above, the increase in total operating expenses of $5.2 million was largely attributable to higher payroll, benefits and other employee related expenses, increased facilities expenses, maintenance costs and outside services, additional depreciation, amortization and property taxes associated with growth, and higher vehicle expenses. These amounts were partially offset by lower costs related to credit, collections and customer service. Depreciation and amortization expense for the current period includes decreases related to certain regulatory items including the absence of recovered costs associated with Hurricane Michael and the impact of the FCG depreciation study.