NextEra Acquires 49% Stake in $1.2 Billion Florida Natural Gas Pipeline

en.Wedoany.com Reported - On September 1, Chesapeake Utilities Corporation completed the sale of a 49% interest in the Florida Energy Pathway (FEP) natural gas pipeline project through its subsidiary Peninsula Pipeline Holdings, with NextEra Energy Resources' FEP Pipeline Holdings acquiring that stake. Following the transaction, Peninsula retains a 51% interest in the project, with both parties jointly holding the project company Florida Energy Pathway LLC. The announcement did not disclose the separate transaction consideration for the 49% interest.

The total investment in the FEP project is estimated at approximately $1.2 billion, and final design and development work remains to be completed. The project plans to construct a 24-inch intrastate natural gas pipeline extending from Palm Beach County, Florida, to Miami-Dade County, and has already secured long-term firm transportation commitments totaling nearly 250,000 dekatherms per day from multiple investment-grade shippers. Upstream gas supply transportation capacity will be provided by Florida Gas Transmission's Phase IX expansion project.

The project is currently advancing engineering design, environmental studies, and stakeholder coordination, with construction planned to commence in the first half of 2028 and operations expected to begin in 2030 following final commissioning. When Chesapeake Utilities first announced FEP in July, it indicated plans to bring in one or more third-party investors, with external investors collectively eligible to hold up to a 49% interest in the project; with NextEra now acquiring the full 49% minority stake, this financing and partner arrangement has been finalized.

The project company has engaged Chesapeake Utilities' subsidiary Peninsula Pipeline Company to handle the construction, management, and operation of FEP. The parties signed amended project company agreements and construction, operation, and management agreements on August 28, which took effect on September 1. The project construction budget, engineering schedule, and initial operating budget have been approved by both parties, and subsequent construction funding will be provided in principle through capital contributions, member loans, or a combination of both, in proportion to Peninsula's 51% and NextEra's 49% ownership stakes.

Prior to project commissioning, major matters require the consent of representatives from both Peninsula and NextEra; after commissioning, matters before the project management committee will in principle require approval from members holding at least 67% of the ownership interests in aggregate. Chesapeake Utilities and NextEra Energy Capital have also provided initial guarantees of approximately $109 million and $105 million, respectively, for the project members' capital contribution obligations. These guarantees serve as performance security for project capital contributions and do not constitute the transaction price for the 49% interest sale.

Peninsula Pipeline Company, as the operator, will also be responsible for procuring third-party equipment and services during the construction phase. Under the executed management agreement, title to materials and equipment purchased for the project will transfer to Florida Energy Pathway LLC upon payment or delivery; the operator will subsequently be required to prepare annual project capital expenditure and operating expense budgets, covering goods and services provided by third-party suppliers.