Chesapeake Utilities: ‘We have an obligation’ to build sustainable energy future
The US east coast energy corporation has accepted the transformational challenge with its robust ESG programme
Chesapeake Utilities Corporation has been providing energy to the US east coast for over 160 years. But it is a modern, diverse company, with a clear commitment to the planet and to the people it serves, alongside its drive to develop profit for its shareholders. President and CEO Jeff Householder explains how the corporation is meeting the challenge to build an environmentally sustainable future: by reducing its own emissions, supporting suppliers and customers to reduce theirs, and innovating in the energy mix it provides. He also discusses the company’s corporate governance achievements – in particular how increasing board diversity has improved the conversation around Chesapeake Utilities’ strategy.
World Finance: Jeff, first can you introduce us to Chesapeake Utilities, and the scale of your operation?
Jeff Householder: Well we’re obviously a US corporation, traded publicly on the New York Stock Exchange. About $2bn, little bit more than $2bn in total assets and market capitalisation.
We serve around 300,000 customers over about nine states, with operations principally in gas transmission, distribution, some electric distribution. We’re probably the 15th or 16th largest propane company in the US at this point.
Our growth has been fairly phenomenal over the past 10-12 years; we’ve doubled the size of our company three times, over that period of time. We have a long, very strong track record of financial performance. We’ve seen returns above 11 percent for 17 years in a row. I think we’re on 60-plus years of paying consistent dividends. We typically are in the upper quartile of energy delivery companies in terms of just about every performance measure that you could think of.
World Finance: The energy industry is under more pressure than ever before to transform, and innovate, and enable an environmentally sustainable future: how is Chesapeake meeting that challenge?
Jeff Householder: Well I think first of all, we have accepted the fact that it is a challenge, that we have an obligation to perform. We are focused significantly on our internal emissions, doing everything from limiting vehicles, converting them from gasoline and diesel to other fuels.
We’re purchasing satellite time, looking for leaks in the system, and we’ve replaced literally hundreds of miles of pipeline and tightened up our systems significantly.
We’re also focused upstream on our suppliers, to make sure that we’re getting supplies from individuals that are also paying attention to their emissions. And we’re working with our customers to make sure that we can do everything we can to ensure that their emissions are reduced.
World Finance: Your stated mission is to “deliver energy that makes life better for people and the communities [you] serve” – what does that look like in practice?
Jeff Householder: Well I think that follows several different patterns. One is, everywhere we go with natural gas, we find that economic development improves. We bring jobs to the communities, it really is an amazing thing to see communities blossom when they get natural gas service for the first time.
I’ll give you an example, we recently expanded down into another area in southern Maryland that had not had natural gas service before. Converting oil, coal, much more significant emission fuels. And we’re seeing economic development in those areas flourish. I mean you’re beginning to see additional jobs come into those communities because of the expansions of industry and commercial development that’s occurring around the natural gas opportunity.
We also have a group of employees that are highly engaged and that are highly dedicated, not just to supporting customers, but to supporting the communities where we serve. And so we have high levels of charitable contributions, employee volunteerism. We really spend a fair amount of time in our company thinking about how we are providing services to customers, how we are supporting our communities. And what we need to do to make sure that our employees are engaged and able to participate in all of those things.
World Finance: Congratulations on winning the World Finance award for Best Corporate Governance in the US for 2022; what does this recognition mean to you?
Jeff Householder: Well I think it’s a testament to the great work that many people in our company have done over the last many, many years. This is not a recent occurrence for us; we take corporate governance very seriously, our board is taking it very seriously. We’ve seen increases for example over the last few years in the diversity of our board. And it really has changed the way that the board interacts, the way that the board thinks about issues. We’re seeing a much more robust conversation about where we need to go strategically, and it’s all because I think that we have more significant diversity on the board.
We’ve made a number of efforts to increase the transparency of our reporting. And we have a fundamental value in our company of integrity. And I think we try to live by that every day, and our governance actions and practices speak directly to that.
World Finance: Finally, what is your vision for a sustainable energy industry, and for Chesapeake Utilities?
Jeff Householder: I think there are several things; as I mentioned earlier, we have an internal obligation I think to make sure that our emissions are as low as we can possibly make them. I think beyond that there are a number of actions that our company is taking and can take.
We will see definitely a change in the chemical composition in the gas that we provide through our pipeline services. I think you’ll see much more renewable gas, we’re moving down a path to invest in those operations ourself. I think you’ll also see an opportunity to introduce hydrogen into our systems. We’re already starting to test that in some of our industrial facilities.
I think natural gas has a long runway ahead of it: to reduce coal, to reduce oil, to reduce other fuels that are much more impactful on the environment.
We also see significant opportunities both for our employees and for our customers to let us help them manage their emissions reductions. And so I think those are just a handful of the issues that really drive us forward, not only doing the right thing in the environment, but actually being able to do that and continue to satisfy our investors’ needs for earnings.