CHESAPEAKE UTILITIES CORPCPK
CHESAPEAKE UTILITIES CORP Fair Value Disclosure
FAIR VALUE OF FINANCIAL INSTRUMENTS
GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The three levels of the fair value hierarchy are as follows:
| Fair Value Hierarchy | Description of Fair Value Level | Fair Value Technique Utilized | ||||||
| Level 1 | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities | Investments - equity securities - The fair values of these trading securities are recorded at fair value based on unadjusted quoted prices in active markets for identical securities. Investments - mutual funds and other - The fair values of these investments, comprised of money market and mutual funds, are recorded at fair value based on quoted net asset values of the shares. | ||||||
| Level 2 | Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability | Derivative assets and liabilities - The fair value of the propane put/call options, propane and interest rate swap agreements are measured using market transactions for similar assets and liabilities in either the listed or over-the-counter markets. | ||||||
| Level 3 | Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity) | Investments - guaranteed income fund - The fair values of these investments are recorded at the contract value, which approximates their fair value. | ||||||
Financial Assets and Liabilities Measured at Fair Value
The following tables summarize our financial assets and liabilities that are measured at fair value on a recurring basis and the fair value measurements, by level, within the fair value hierarchy as of December 31, 2025 and 2024, respectively:
| Fair Value Measurements Using: | |||||||||||||||||||||||
| As of December 31, 2025 | Fair Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Investments—equity securities | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
| Investments—guaranteed income fund | 0.9 | — | — | 0.9 | |||||||||||||||||||
| Investments—mutual funds and other | 16.3 | 16.3 | — | — | |||||||||||||||||||
| Total assets | $ | 17.2 | $ | 16.3 | $ | — | $ | 0.9 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Derivative liabilities | $ | 1.4 | $ | — | $ | 1.4 | $ | — | |||||||||||||||
| Fair Value Measurements Using: | |||||||||||||||||||||||
| As of December 31, 2024 | Fair Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Investments—equity securities | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
| Investments—guaranteed income fund | 1.1 | — | — | 1.1 | |||||||||||||||||||
| Investments—mutual funds and other | 13.3 | $ | 13.3 | — | — | ||||||||||||||||||
| Total investments | 14.4 | 13.3 | — | 1.1 | |||||||||||||||||||
| Derivative assets | 0.7 | — | 0.7 | — | |||||||||||||||||||
| Total assets | $ | 15.1 | $ | 13.3 | $ | 0.7 | $ | 1.1 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Derivative liabilities | $ | 0.1 | $ | — | $ | 0.1 | $ | — | |||||||||||||||
The changes in the fair value of our Level 3 investments for the years ended December 31, 2025 and 2024 were not material. Investment income from our Level 3 investments is reflected in other income (expense), net in the consolidated statements of income.
At December 31, 2025 and 2024, there were no non-financial assets or liabilities required to be reported at fair value. We review our non-financial assets for impairment at least on an annual basis, as required.
Other Financial Assets and Liabilities
Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carrying values approximating fair value include accounts payable, other accrued liabilities and short-term debt. The fair value of cash and cash equivalents is measured using the comparable value in the active market (Level 1 measurement). The fair value of short-term debt approximates the carrying value due to its near-term maturities and because interest rates approximate current market rates (Level 2 measurement).
At December 31, 2025, long-term debt, which includes the current maturities but excludes debt issuance cost, had both a carrying value and fair value of $1.5 billion. At December 31, 2024, long-term debt, which includes the current maturities but excludes debt issuance cost, had a carrying value of $1.3 billion, compared to the estimated fair value of $1.2 billion. The fair value was calculated using a discounted cash flow methodology that incorporates a market interest rate based on published corporate borrowing rates for debt instruments with similar terms and average maturities, and with adjustments for duration, optionality, and risk profile. The valuation technique used to estimate the fair value of long-term debt would be considered a Level 2 measurement.
See Note 15, Employee Benefit Plans, for fair value measurement information related to our pension plan assets.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 29, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.