Business Context and Reporting Period
Company: Chesapeake Utilities Corporation (CUC)
Filing Type: Form 8-K (Current Report)
Date of Report: September 3, 2010
Event: FERC issued a Certificate of Public Convenience and Necessity to subsidiary Eastern Shore Natural Gas Company (ESNG) to construct an 8-mile, 16-inch mainline extension in Pennsylvania.
Key Financial Metrics and Project Details
This filing details a specific capital project rather than general corporate financial performance. Key metrics for the project include:
- Estimated Project Cost: $19.4 million
- Target Completion Date: December 31, 2010
- Maximum Capacity: 50,000 dekatherms per day
- Committed Capacity (Precedent Agreements): 40,000 dekatherms per day via 17-year firm transportation contracts with CUC-Delaware and CUC-Maryland divisions.
- Rate Basis: $9.0271 per dekatherm (Part 284 Maximum Rate Schedule Firm Transportation Zone 1).
Material Changes and Projected Margins
The filing outlines a 3-year phase-in schedule for the new interconnection with Texas Eastern Transmission, LP (TETLP). The estimated annualized margins based on the phase-in are:
| Effective Date | Annualized Transported (Dekatherms/Day) | Estimated Annualized Margin |
|---|---|---|
| November 1, 2010 | 20,000 | $2.2 million |
| November 1, 2011 | 15,000 | $1.6 million |
| November 1, 2012 | 5,000 | $0.5 million |
| Total | 40,000 | $4.3 million |
Note: The phase-in schedule may vary based on the actual completion date of the facilities.
Outlook, Risks, and Management Commentary
- Strategic Outlook: The project provides ESNG's shippers access to natural gas supplies from the Appalachian region. It represents the third major upstream pipeline interconnection for ESNG customers.
- Conditions: The project proceeds subject to certain conditions imposed by FERC.
- Risks/Contingencies: The filing does not explicitly list financial risks or contingencies beyond the dependency on the actual completion date for the margin phase-in schedule.
Investor Verification Checklist
- Verify the actual completion date of the pipeline extension to confirm if the projected margin phase-in schedule remains accurate.
- Confirm that the $19.4 million project cost remains within budget as construction proceeds.
- Monitor FERC for any additional conditions or regulatory changes affecting the project's operation.
- Review subsequent filings for updates on the execution of the 17-year firm transportation contracts.