Chesapeake Utilities deal to double presence in Florida
DOVER — Chesapeake Utilities has reached a deal to acquire Florida City Gas for $932 million, which would more than double the utility company’s presence in the Sunshine State.
“We have generated meaningful earnings growth by acquiring businesses in states where we already operate and subsequently developing and executing additional growth opportunities,” Chesapeake Utilities CEO and President Jeff Householder said in a statement. “We see similar opportunities with Florida City Gas, and believe we are well positioned to capture additional growth including gas distribution expansion to serve new residential development, as well as infrastructure investments across our other platforms, such as gas transmission.”
Florida City Gas serves about 120,000 residential and commercial natural gas customers in eight counties including Palm Beach, Miami-Dade. It’s also estimated to have a 3,800 miles of distribution pipeline and 80 miles of transmission pipeline. Its parent company, NextEra Energy, has other subsidiaries that publicly announced it would sell off the natural gas pipelines to focus on renewable energy options.
Headquartered in Dover, Chesapeake Utilities has been focusing on Florida in the last couple of years. In 2009, the utility company bought Florida Public Utilities which brought 3,000 miles of distribution mains in the network as well as 87,000 customers.
Since that first deal, Chesapeake Utilities increased $28.6 million net income by the end of 2022 in Florida. Investments grew in the Sunshine State to $734.6 million.
Once the deal closes at the end of the third quarter of this year, Chesapeake Utilities will have 211,154 customers in Florida in 31 counties. The company’s Florida portfolio will be more than 60% of its income, compared to 45% by the end of 2022.
When the deal with Florida City Gas closes at the end of the third quarter of this year, Chesapeake Utilities will have a total of 551 employees in the state. Recently, Florida City also completed a new facility in Homestead, Fla., that can store up to 270,000 gallons of natural gas.
The deal is also projected to increase Chesapeake Utilities’ regulated natural gas utility customers and net plant by 50% and 30%, respectively, with the regulated business mix reaching 87%.
“Chesapeake Utilities has a proven track record of deploying its regulatory, operations, supply and business development expertise to drive transformative growth in Florida,” Chesapeake Utilities Chief Financial Officer and Executive Vice President Beth Cooper said. “We intend to finance the transaction through a combination of long-term debt and equity, ensuring we maintain a strong balance sheet while supporting our long-term earnings and dividend growth.”