Florida Public Service Commission native order document 01554-2023

Order No. PSC-2023-0100-FOF-GUFlapubserv

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FILED 2/28/2023
DOCUMENT NO. 01554-2023
FPSC - COMMISSION CLERK
BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION
In re: Application for authorization to issue
common stock, preferred stock and secured
and/ or unsecured debt, and to enter into
agreements for interest rate swap products,
equity products and other financial derivatives
in 2023, by Chesa eake Utilities Cor oration.
DOCKET NO. 20220218-GU
ORDER NO. PSC-2023-0100-FOF-GU
ISSUED: February 28 , 2023
The following Commissioners participated in the disposition of this matter:
ANDREW GILES FAY, Chairman
ART GRAHAM
GARYF.CLARK
MIKE LAROSA
GABRIELLA P ASSIDOMO
ORDER GRANTING CHESAPEAKE UTILITIES CORPORATION APPROVAL FOR
AUTHORITY TO ISSUE AND SELL SECURITIES
BY THE COMMISSION:
Chesapeake Utilities Corporation (Chesapeake or Utility) requests authority to issue during
calendar year 2023: up to 8.75 million shares of Chesapeake common stock; up to 2 million shares
of Chesapeake preferred stock; up to $650 million in secured and/or unsecured debt; to issue short-
term obligations in an amount not to exceed $500 million; and to enter into agreements for up to
$400 million in interest rate swap products, equity products and other financial derivative s.
Chesapeake allocates funds to the Chesapeake Utilities Corporation - Florida Division,
Florida Public Utilities Company (FPUC), FPUC - Indiantown Division, and FPUC - Fort Meade
Division on an as -needed basis. Chesapeake acknowledges that in no event will such allocations
to the Florida Divisions exceed 75 percent of the proposed equity securities (common stock and
preferred stock), long-term debt, short-term debt, interest rate swap products, equity products, and
financial derivatives issued by Chesapeake.
Notice of Chesapeake's application was given in the Florida Administrative Register on
January 27, 2023.
Pursuant to Section 366.04, Florida Statutes (F.S.), the Commission shall have jurisdiction
to regulate and supervise each public utility in the issuance and sale of its securities, except a
security which is a note or draft maturing not more than one year after the date of such issuance
and sale and aggregating not more than 5 percent of the par value of the other securities of the
public utility then outstanding.
ORDER NO. PSC-2023-0100-FOF-GU
DOCKET NO. 20220218-GU
PAGE 2
Chesapeake proposes to issue up to 750,000 new shares of its common stock during 2023
for the purpose of administering Chesapeake's Retirement Savings Plan, Stock and Incentive
Compensation Plan, and Dividend Reinvestment and Stock Purchase Plan. The Company will be
seeking shareholder approval for a new Stock and Incentive Compensation Plan, as the current one
expires in May, 2023. The share breakdown for each specific purpose is as follows:
Number of Shares 	Purpose
200,000 	Issuance pursuant to the Company’s
Retirement Savings Plan
200,000 	Issuance under the terms of the Company’s
Stock and Incentive Compensation Plan
350,000 	Issuance pursuant to the Company’s Dividend
Reinvestment and Stock Purchase Plan.
In addition, Chesapeake is requesting Commission authorization to issue up to 3,000,000
shares of Chesapeake stock or an equity-linked instrument equivalent in value in 2023 to
permanently finance Chesapeake’s ongoing capital expenditure program. Chesapeake seeks
further Commission authorization to issue during 2023 up to an additional 5,000,000 shares of
common stock to finance Chesapeake's ongoing acquisition program. The capital expenditure
program is subject to continuous review and modification and is funded from short-term
borrowings and cash provided by operating activities. The Company may from time to time,
permanently finance its short-term borrowings through the issuance of common stock or an equity-
linked instrument, as opposed to long-term debt. If the Company were to undertake a stock split
or reverse split, such amounts would be adjusted accordingly.
Chesapeake requests Commission authorization to issue up to $650,000,000 in new
secured and/or unsecured long-term debt during 2023 for general corporate purposes including,
but not limited to, working capital, retirement of short-term debt, retirement of long-term debt,
capital improvements and acquisitions. Chesapeake also seeks Commission authorization to issue
short-term obligations up to $500,000,000 during 2023 to fund its operations, capital expenditures
on a short-term basis and/or in support of the execution of its growth strategy.
Chesapeake is also requesting authority to issue up to 2,000,000 shares of Chesapeake
preferred stock in 2023, for possible acquisitions, financing transactions, and other general
corporate purposes.
Chesapeake further seeks Commission approval to enter into financial agreements with
institutions in 2023 to negotiate and execute financial derivatives enabling the Company to lock
in its future financing costs and minimize its risk. A financial derivative is a risk-shifting
agreement, the value of which is derived from the value of an underlying asset. The underlying
asset could be a physical commodity, an interest rate, a company’s stock, a stock index, a currency,
or virtually any other tradable instrument upon which two parties can agree. A financial derivative
can be used for hedging, protecting against financial risk, or can be used to speculate on the
movement of security prices, interest rates or the levels of financial indices. Financial derivatives
fall into two categories. One consists of customized, privately negotiated derivatives, referred to
as over-the-counter (OTC) derivatives or swaps. The other category consists of standardized,
exchangeable derivatives, known generically as futures. In addition, there are various types of
ORDER NO. PSC-2023-0100-FOF-GU
DOCKET NO. 20220218-GU
PAGE 3
products within each of the two categories. The Company has attempted to identify below some
of the financial derivatives that the Company may evaluate in 2023, although the listing is not
intended to be all-inclusive. Rather, the Company seeks approval to evaluate and employ those
financial derivatives that would mitigate its financial risk associated with a particular financing
transaction(s).
Chesapeake is proposing to have the flexibility and authority to enter into the following (a)
Treasury rate locks, credit spread locks, interest rate swaps, collars, caps and/or floors (the "Interest
Rate Swap Products"); (b) equity collars, floors, prepaid forward contracts, covered calls, forward
sales and purchases and/or equity-linked instruments (the "Equity Products"); or (c) any other
Financial Derivatives that meet the objectives described above on such terms as Chesapeake
considers to be appropriate, provided that the notional amount(s) for said Interest Rate Swap
Products, Equity Products, and/or other Financial Derivatives do not, in the aggregate, exceed the
sum of $400,000,000.
Chesapeake Utilities Corporation allocates funds to the Florida Division, Florida Public
Utilities and the Indiantown and Fort Meade divisions on an as-needed basis.
After reviewing the application, we find that the issuance and sale of the aforementioned
securities will not impair the ability of Chesapeake to perform the services of the public utility.
These transactions are for lawful purposes within the Company’s corporate powers. As such, the
application is granted subject to the conditions stated herein.
Our approval of the proposed issuance of securities by Chesapeake does not indicate
specific approval of any rates, terms, or conditions associated with the issuance. Such matters are
properly reserved for review by this Commission within the context of a rate proceeding.
Based on the foregoing, it is
ORDERED by the Florida Public Service Commission that the application of Chesapeake
Utilities Corporation to issue during calendar year 2023: up to 8.75 million shares of Chesapeake
common stock; up to 2 million shares of Chesapeake preferred stock; up to $650 million in secured
and/or unsecured debt; to issue short-term obligations in an amount not to exceed $500 million,
and to enter into agreements up to $400 million in interest rate swap products, equity products and
other financial derivatives is hereby granted. It is further.
ORDERED that Chesapeake Utilities Corporation may allocate funds to the Chesapeake
Utilities Corporation – Florida Division, Florida Public Utilities Company (FPUC), FPUC –
Indiantown Division, and FPUC – Fort Meade Division on an as-needed basis. Chesapeake
acknowledges that in no event will such allocations to the Florida Divisions exceed 75 percent of
the proposed equity securities (common stock and preferred stock), long-term debt, short-term
debt, interest rate swap products, equity products, and financial derivatives issued by Chesapeake.
It is further.
ORDER NO. PSC-2023-0 I 00-FOF -GU
DOCKET N O. 20220218- GU
PAGE 4
ORDERED th at Ch esapeake Ut ili ties Corporation shall fil e a consummation report in
compliance w ith Rule 25 -8.009, Florida Adm ini strative Code, within 90 days of the e nd of th e
fi scal year in which it issues any securities authorize d by this Order. It is further.
ORDERED For monitoring purposes, this docket sha ll remain open un t il Ma y 3, 2024, to
a ll ow the Utili ty time to fil e the required Consummation Repo rt.
AAW
By ORDER of the Flor id a Public Service Commiss io n thi s 28 th day of Feb ru ary, 2023.
Florida Public Service Co mmi ssion
2540 Shumard Oak Bouleva rd
Tal lahassee, Florida 32399
(850) 41 3-6770
www.floridap sc .com
Cop ie s furnished : A copy of this document is
provided to the pa rties of reco rd at th e time of
issuance and, if appl icab le , interested person s.
NOTICE OF FURTHER PROCEEDINGS OR JU DI CIAL REV IEW
The Fl orida Pub Iic Service Com mi ss ion 	is required by Section 	120.569( I ), Florida
Statutes, to no tify parties of any administrati ve hearing or judicial review of Co mmi ssion o rd ers
that is ava il able under Sec ti ons 120.57 or 120.68, Florida Stat ut es, as we ll as th e procedures a nd
time limits th at apply. T hi s no ti ce should not be const ru ed 	to mean a ll 	re qu es ts fo r an
administrati ve hea rin g or judicial rev ie w wi ll be gra nt ed or re su lt in the re li ef so ug ht.
Any party adversely affected by th e Co mmi ssion's final action in this matter may req ues t:
I) recons id eration of th e decision by filing a mo ti on for reconsideration w ith th e Office of
Comm iss ion Clerk, 2540 Shumard Oak Bouleva rd , Ta ll ahassee, Flo rid a 32399 -0 850, within
fifteen ( 15) days of the issuance of this order in the fo rm prescr ib ed by Ru le 25 -22.060, Flor id a
Adm ini strative Code; or 2) judicial re view by the Florida Supreme Court in the case of an elec tri c,
gas or telephone utility or th e F ir st Di strict Co urt of Appea l in th e case of a wa ter a nd /or wastewater
ORDER NO. PSC-2023-0100-FOF-GU
DOCKET NO. 20220218-GU
PAGE 5
utility by filing a notice of appeal with the Office of Commission Clerk, and filing a copy of the
notice of appeal and the filing fee with the appropriate court. This filing must be completed within
thirty (30) days after the issuance of this order, pursuant to Rule 9.110, Florida Rules of Appellate
Procedure. The notice of appeal must be in the form specified in Rule 9.900(a), Florida Rules of
Appellate Procedure.

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