Segment Information

We use the management approach to identify operating segments. We organize our business around differences in regulatory environment and/or products or services, and the operating results of each segment are regularly reviewed by the chief operating decision maker (our Chief Executive Officer) in order to make decisions about resources and to assess performance.

Our operations are comprised of two reportable segments:


•	Regulated Energy. Includes energy distribution and transmission services (natural gas distribution, natural gas transmission and electric distribution operations). All operations in this segment are regulated, as to their rates and services, by the PSC having jurisdiction in each operating territory or by the FERC in the case of Eastern Shore.

•

Unregulated Energy. Includes energy transmission, energy generation, propane delivery, and other energy services (propane distribution, the operations of our Eight Flags' CHP plant, as well as natural gas marketing, gathering, processing, transportation and supply). These operations are unregulated as to their rates and services. Through March 2017, this segment also included the operations of Xeron, our propane and crude oil trading subsidiary that wound down its operations shortly after the first quarter of 2017. 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.

The remainder of our operations is presented as “Other businesses and eliminations”, which consists of unregulated subsidiaries that own real estate leased to Chesapeake Utilities, as well as certain corporate costs not allocated to other operations.

The following table presents financial information about our reportable segments:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
(in thousands)
Operating Revenues, Unaffiliated Customers
Regulated Energy segment	$	67,731		$	68,815		$	173,685		$	165,261
Unregulated Energy segment and other businesses	68,933			56,269			202,335			144,983
Total operating revenues, unaffiliated customers	$	136,664		$	125,084		$	376,020		$	310,244
Intersegment Revenues ⁽¹⁾
Regulated Energy segment	$	2,773		$	2,181		$	6,212		$	3,389
Unregulated Energy segment	7,412			6,780			19,377			10,791
Other businesses	194			159			387			387
Total intersegment revenues	$	10,379		$	9,120		$	25,976		$	14,567
Operating Income
Regulated Energy segment	$	14,304		$	14,086		$	41,015		$	37,481
Unregulated Energy segment	490			2			14,174			11,577
Other businesses and eliminations	(1,546		)	(27		)	(1,535		)	102
Total operating income	13,248			14,061			53,654			49,160
Other expense, net	(262		)	(1,002		)	(194		)	(1,703		)
Interest charges	3,881			3,073			7,545			5,811
Income before Income Taxes	9,105			9,986			45,915			41,646
Income taxes	2,718			3,940			12,674			16,456
Net Income	$	6,387		$	6,046		$	33,241		$	25,190


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



(in thousands)	June 30, 2018		December 31, 2017
Identifiable Assets
Regulated Energy segment	$	1,199,672	$	1,121,673
Unregulated Energy segment	227,191		259,041
Other businesses and eliminations	36,078		34,220
Total identifiable assets	$	1,462,941	$	1,414,934

Our operations are entirely domestic.