**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**








**FORM
      10-Q**





(Mark
      One)





**x
      QUARTERLY REPORT
      PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934**





For
      the
      quarterly period ended **June 30, 2007**





**o
      TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**





For
      the
      transition period from ____________  to ______________





Commission
      File Number:  **001-10608**





**FLORIDA
      PUBLIC UTILITIES COMPANY**


(Exact
      name of registrant as specified in its charter)








**Florida**
              **59-0539080**(State
                  or other jurisdiction of incorporation or organization)
              (I.R.S.
                  Employer Identification No.)





**401
      South Dixie Highway,**


**West
      Palm Beach, Fl.  33401**


**(561)
      832-0872**


(Address
      and telephone number of registrant’s principal executive offices


and
      principal place of business)








Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes  **x**     No  **o**





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer.  See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act. (Check one):


Large
                  accelerated filer  **o**
              Accelerated
                  filer **o**
              Non-accelerated
                  filer **x**





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).   Yes  **o**      No
      **x**





On
      August
      1, 2007, there were 6,036,178 shares of $1.50 par value common stock
      outstanding.












**INDEX****Part
                  I.**
              **Financial
                  Information**Item
                  1.
              Financial
                  StatementsCondensed
                  Consolidated Statements of
                  IncomeCondensed
                  Consolidated Balance SheetsCondensed
                  Consolidated Statements of Cash
                  FlowsNotes
                  to Condensed Consolidated Financial
                  StatementsItem
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition
                  and Results of OperationsItem
                  3.
              Quantitative
                  and Qualitative Disclosures about Market
                  RiskItem
                  4T.
              Controls
                  and Procedures**Part
                  II.**
              **Other
                  Information**Item
                  4.
              Submission
                  of Matters to a Vote of Security
                  HoldersItem
                  6.
              ExhibitsSignatures




*Index*





**PART
                I.**
            **FINANCIAL
                INFORMATION**





**Item
                1.**
            **Financial
                Statements**





**FLORIDA
                  PUBLIC UTILITIES
                  COMPANY****CONDENSED
                  CONSOLIDATED STATEMENTS OF INCOME (Unaudited)**(Dollars
                  in thousands, except share data)**Three
                  Months Ended**
                **June
                  30,**
              
              
              **Six
                  Months Ended**
                **June
                  30,****Revenues**
              
              **2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006**Natural
                  gas
              
              $
              15,502
              
              
              $
              14,632
              
              
              $
              36,075
              
              
              $
              41,586Electric
              
              
              13,135
              
              
              
              11,815
              
              
              
              26,493
              
              
              
              23,511Propane
                  gas
              
              
              3,831
              
              
              
              3,528
              
              
              
              8,512
              
              
              
              8,288Total
                  revenues
              
              
              32,468
              
              
              
              29,975
              
              
              
              71,080
              
              
              
              73,385Cost
                  of Fuel and Other Pass Through Costs
              
              
              20,699
              
              
              
              18,476
              
              
              
              45,468
              
              
              
              47,689Gross
                  Profit
              
              
              11,769
              
              
              
              11,499
              
              
              
              25,612
              
              
              
              25,696**Operating
                  Expenses**Operation
                  and maintenance
              
              
              7,443
              
              
              
              6,829
              
              
              
              14,616
              
              
              
              13,696Depreciation
                  and amortization
              
              
              2,031
              
              
              
              1,925
              
              
              
              4,103
              
              
              
              3,903Taxes
                  other than income taxes
              
              
              699
              
              
              
              680
              
              
              
              1,559
              
              
              
              1,504Total
                  operating expenses
              
              
              10,173
              
              
              
              9,434
              
              
              
              20,278
              
              
              
              19,103Operating
                  Income
              
              
              1,596
              
              
              
              2,065
              
              
              
              5,334
              
              
              
              6,593**Other
                  Income and (Deductions)**Merchandise
                  and service revenue
              
              
              752
              
              
              
              1,090
              
              
              
              1,667
              
              
              
              2,316Merchandise
                  and service expenses
              
              
              (670
              )
              
              
              (1,007
              )
              
              
              (1,480
              )
              
              
              (2,192
              )Other
                  income
              
              
              145
              
              
              
              133
              
              
              
              296
              
              
              
              284Interest
                  expense
              
              
              (1,216
              )
              
              
              (1,119
              )
              
              
              (2,383
              )
              
              
              (2,332
              )Total
                  other deductions – net
              
              
              (989
              )
              
              
              (903
              )
              
              
              (1,900
              )
              
              
              (1,924
              )Earnings
                  Before Income Taxes
              
              
              607
              
              
              
              1,162
              
              
              
              3,434
              
              
              
              4,669Income
                  Taxes
              
              
              (197
              )
              
              
              (424
              )
              
              
              (1,226
              )
              
              
              (1,710
              )Net
                  Income
              
              
              410
              
              
              
              738
              
              
              
              2,208
              
              
              
              2,959Preferred
                  Stock Dividends
              
              
              7
              
              
              
              7
              
              
              
              14
              
              
              
              14Earnings
                  For Common Stock
              
              $
              403
              
              
              $
              731
              
              
              $
              2,194
              
              
              $
              2,945(Basic
                  and Diluted):Earnings
                  Per Common Share
              
              $
              0.07
              
              
              $
              0.12
              
              
              $
              0.36
              
              
              $
              0.49Dividends
                  Declared Per Common Share
              
              $
              0.1125
              
              
              $
              0.1075
              
              
              $
              0.2200
              
              
              $
              0.2108Average
                  Shares Outstanding
              
              
              6,030,928
              
              
              
              5,985,162
              
              
              
              6,027,833
              
              
              
              5,982,599These
                  financial statements should be read with the accompanying Notes
                  to
                  Condensed Consolidated Financial Statements.





*Index*




**FLORIDA
                  PUBLIC UTILITIES COMPANY****CONDENSED
                  CONSOLIDATED BALANCE SHEETS (Unaudited)**(Dollars
                  in thousands)**ASSETS**
              
              **June
                  30,**
                **2007**
              
              
              **December
                  31,**
                **2006**Utility
                  PlantUtility
                  Plant
              
              $
              194,067
              
              
              $
              188,968Less
                  Accumulated depreciation
              
              
              62,078
              
              
              
              59,757Net
                  utility plant
              
              
              131,989
              
              
              
              129,211Current
                  AssetsCash
              
              
              1,315
              
              
              
              84Accounts
                  receivable
              
              
              10,446
              
              
              
              12,199Allowance
                  for uncollectible accounts
              
              
              (406
              )
              
              
              (429
              )Unbilled
                  receivables
              
              
              1,687
              
              
              
              1,957Notes
                  receivable
              
              
              292
              
              
              
              298Inventories
                  (at average unit cost)
              
              
              4,025
              
              
              
              4,120Prepaid
                  expenses
              
              
              418
              
              
              
              963Under-recovery
                  of fuel costs
              
              
              1,456
              
              
              
              862Deferred
                  income taxes-current
              
              
              561
              
              
              
              418Other
                  regulatory assets-environmental
              
              
              456
              
              
              
              456Other
                  regulatory assets-storm reserve
              
              
              162
              
              
              
              228Deferred
                  charges-current
              
              
              260
              
              
              
              495Total
                  current assets
              
              
              20,672
              
              
              
              21,651Other
                  AssetsInvestments
                  held for environmental costs
              
              
              3,413
              
              
              
              3,364Other
                  regulatory assets-environmental
              
              
              7,513
              
              
              
              7,828Other
                  regulatory assets-storm reserve
              
              
              -
              
              
              
              42Other
                  regulatory assets-retirement plans
              
              
              287
              
              
              
              587Long-term
                  receivables and other investments
              
              
              5,504
              
              
              
              5,740Deferred
                  charges
              
              
              6,146
              
              
              
              6,001Goodwill
              
              
              2,405
              
              
              
              2,405Intangible
                  assets (net)
              
              
              4,476
              
              
              
              4,405Total
                  other assets
              
              
              29,744
              
              
              
              30,372Total
                  Assets
              
              $
              182,405
              
              
              $
              181,234These
                  financial statements should be read with the accompanying Notes
                  to
                  Condensed Consolidated Financial Statements.




*Index*




**FLORIDA
                  PUBLIC UTILITIES COMPANY****CONDENSED
                  CONSOLIDATED BALANCE SHEETS (Unaudited)**(Dollars
                  in thousands)**CAPITALIZATION
                  AND LIABILITIES**
              
              **June
                  30,**
                **2007**
              
              
              **December
                  31,**
                **2006**CapitalizationCommon
                  shareholders' equity
              
              $
              48,813
              
              
              $
              47,572Preferred
                  stock
              
              
              600
              
              
              
              600Long-term
                  debt
              
              
              50,730
              
              
              
              50,702Total
                  capitalization
              
              
              100,143
              
              
              
              98,874Current
                  LiabilitiesLine
                  of credit
              
              
              1,105
              
              
              
              3,466Accounts
                  payable
              
              
              10,098
              
              
              
              10,279Insurance
                  accrued
              
              
              150
              
              
              
              181Interest
                  accrued
              
              
              598
              
              
              
              789Other
                  accruals and payables
              
              
              3,546
              
              
              
              3,023Taxes
                  accrued
              
              
              2,164
              
              
              
              1,180Over-earnings
                  liability
              
              
              760
              
              
              
              722Over-recovery
                  of fuel costs and other
              
              
              4,416
              
              
              
              4,011Customer
                  deposits
              
              
              10,407
              
              
              
              9,608Total
                  current liabilities
              
              
              33,244
              
              
              
              33,259Other
                  LiabilitiesDeferred
                  income taxes
              
              
              16,713
              
              
              
              17,436Environmental
                  liability
              
              
              12,768
              
              
              
              13,140Regulatory
                  liability-storm reserve
              
              
              1,697
              
              
              
              1,636Regulatory
                  liabilities-other
              
              
              9,947
              
              
              
              9,676Other
                  liabilities
              
              
              7,893
              
              
              
              7,213Total
                  other liabilities
              
              
              49,018
              
              
              
              49,101Total
                  Capitalization and Liabilities
              
              $
              182,405
              
              
              $
              181,234These
                  financial statements should be read with the accompanying Notes
                  to
                  Condensed Consolidated Financial Statements.




*Index*




**FLORIDA
                  PUBLIC UTILITIES
                  COMPANY****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                  (Unaudited)**(Dollars
                  in thousands)**Six
                  Months Ended**
                **June
                  30,****2007**
              
              
              **2006**Net
                  cash provided by operating activities
              
              $
              10,980
              
              
              $
              16,155Investing
                  ActivitiesConstruction
                  expenditures
              
              
              (6,537
              )
              
              
              (6,751
              )Proceeds
                  received on notes receivable
              
              
              371
              
              
              
              296Other
              
              
              (150
              )
              
              
              513Net
                  cash used in investing activities
              
              
              (6,316
              )
              
              
              (5,942
              )Financing
                  ActivitiesNet
                  decrease in short-term borrowings
              
              
              (2,361
              )
              
              
              (8,121
              )Dividends
                  paid
              
              
              (1,307
              )
              
              
              (1,899
              )Other
                  increases
              
              
              235
              
              
              
              232Net
                  cash used in financing activities
              
              
              (3,433
              )
              
              
              (9,788
              )Net
                  increase in cash
              
              
              1,231
              
              
              
              425Cash
                  at beginning of period
              
              
              84
              
              
              
              695Cash
                  at end of period
              
              $
              1,315
              
              
              $
              1,120These
                  financial statements should be read with the accompanying Notes
                  to
                  Condensed Consolidated Financial Statements.




*Index*





**FLORIDA
      PUBLIC UTILITIES COMPANY**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**


**June
      30, 2007**





**1.**
            **Basis
                of Presentation**


The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with the generally accepted accounting principles in
      the
      United States (GAAP) for interim financial information and with the instructions
      for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
      all of the information and footnotes required by GAAP for complete financial
      statements. In the opinion of management, all adjustments necessary for fair
      presentation have been included. The operating results for the period are not
      necessarily indicative of the results that may be expected for the full year.
      For further information, refer to the audited consolidated financial statements
      and footnotes included in the Company’s Annual Report on Form 10-K for the year
      ended December 31, 2006.





**2.**
            **Use
                of Estimates**


The
      preparation of financial statements in conformity with GAAP requires the Company
      to make certain estimates and assumptions that affect the reported amounts
      of
      assets and liabilities, disclosure of any contingent assets and liabilities
      at
      the date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period. Significant estimates include allowances,
      accruals for pensions, environmental liabilities, liability reserves, regulatory
      deferred tax liabilities, unbilled revenue and over-earnings liability. Actual
      results may differ from these estimates.





**3.**
            **Regulation**


The
      financial statements are prepared in accordance with the provisions of Statement
      of Financial Accounting Standards (SFAS) No. 71 – "Accounting for the Effects of
      Certain Types of Regulation".  SFAS No. 71 recognizes that accounting
      for rate-regulated enterprises should reflect the relationship of costs and
      revenues introduced by rate regulation. A regulated utility may defer
      recognition of a cost (a regulatory asset) or show recognition of an obligation
      (a regulatory liability) if it is probable that, through the ratemaking process,
      there will be a corresponding increase or decrease in revenues. The Company
      has
      recognized certain regulatory assets and liabilities in the condensed
      consolidated balance sheets.





As
      a
      result, Florida Public Service Commission (FPSC) regulation has a significant
      effect on the Company’s results of operations. The FPSC approves rates that are
      intended to permit a specified rate of return on investment. Rate tariffs allow
      the flexibility of automatically passing through the cost of natural gas and
      electricity to customers. Increases in the operating expenses of the regulated
      segments may require a request for increases in the rates charged to
      customers.





**4.**
            **Pledged
                Assets**


Substantially,
      all of the Company’s utility plant and the shares of its wholly owned
      subsidiary, Flo-Gas Corporation, collateralize the Company’s First Mortgage
      Bonds (long-term debt).  Cash, accounts receivable and inventory are
      collateral for the line of credit.





*Index*




**5.**
            **Restriction
                on Dividends**


The
      Company’s Fifteenth Supplemental Indenture of Mortgage and Deed of Trust
      restricts the amount that is available for cash dividends. At June 30, 2007,
      approximately $9.8 million of retained earnings were free of such restriction
      and available for the payment of dividends. The Company’s line of credit
      agreement contains covenants that, if violated, could restrict or prevent the
      payment of dividends. The Company is not in violation of these
      covenants.





**6.**
            **Allowance
                for Uncollectible Accounts**


The
      Company records an allowance for uncollectible accounts based on historical
      information and trended current economic conditions.  The bad debt
      write-offs for the second quarter 2007 were $135,000 while the provisions were
      $115,000.





**7.**
            **Storm
                Reserves**


As
      of
      June 30, 2007, the Company had a storm reserve of approximately $1.7 million
      for
      the electric segment. The Company does not have a storm reserve for the natural
      gas or propane gas segments. Any future storm costs affecting the natural gas
      segment will be deferred for recovery from customers either through rate
      increases or through applying any available over-earnings as a reduction to
      the
      costs.  All such deferred costs are subject to review and approval by
      the FPSC.





The
      Company deferred storm costs for the natural gas segment incurred in 2004 as
      a
      regulatory asset on the condensed consolidated balance sheets. The FPSC approved
      recovery of these storm costs, plus interest and revenue related taxes, over
      a
      30-month period beginning in November 2005. As of June 30, 2007, the remaining
      balance of these storm costs to be recovered is $159,000.





The
      FPSC
      staff issued a recommendation on August 2, 2007, and if approved, the
      overearnings for 2005 will remain as currently estimated, and the disposition
      will be used to fund our storm reserve and eliminate the storm surcharge and
      the
      related regulatory asset – storm reserve in our natural gas
      operations.





**8.**
            **Goodwill
                and Other Intangible
                Assets**


The
      Company does not amortize goodwill or intangibles with indefinite lives. The
      Company periodically tests the applicable reporting segments, natural gas and
      propane gas, for impairment. In the event goodwill or intangible assets related
      to a segment are determined to be impaired, the Company would write down such
      assets to fair value. The impairment test performed in 2007 and 2006 showed
      no
      impairment for either reporting segment.





Goodwill
      associated with the Company’s acquisitions consists of $500,000 in the natural
      gas segment and $1.9 million in the propane gas segment. The summary of
      intangible assets at June 30, 2007, is as follows:





*Index*




**Intangible
                  Assets**
                (Dollars
                  in thousands)**2007**Customer
                  distribution rights
              (Indefinite
                  life)
              
              $
              1,900Customer
                  relationships
              (Indefinite
                  life)
              
              
              900Software
              (Five
                  to nine year life)
              
              
              3,367Accumulated
                  amortization
              
              
              (1,691
              )Total
                  intangible assets, net of amortization
              
              $
              4,476





The
      amortization expense of intangible assets was approximately $174,000 for the
      six
      months ended June 30, 2007.





**9.**
            **Common
                Shareholders’ Equity**


Items
      impacting common shareholders’ equity other than income and dividends are the
      dividend reinvestment program, employee stock purchase program, stock
      compensation plans and treasury stock. The net impact of these additional items
      increased common shareholders’ equity approximately $281,000 for the six months
      ended June 30, 2007.  Accumulated other comprehensive loss, comprised
      of the deferred cost of employee benefit plans, totaled approximately $50,000
      and $100,000 as of June 30, 2007 and December 31, 2006, respectively. The change
      to other comprehensive loss for the quarter ending June 30, 2007 was an
      approximate net $26,000 gain.





**10.**
            **Over-earnings
                – Natural Gas Segment**


The
      FPSC
      approves rates that are intended to permit a specified rate of return on
      investment and limits the maximum amount of earnings of regulated operations.
      The Company has agreed with the FPSC staff to limit the earned return on equity
      for regulated natural gas and electric operations.





The
      Company has recorded estimated 2006 and 2005 over-earnings for regulated natural
      gas operations of $25,000 and $735,000, respectively. We revised our estimate
      for the 2005 overearnings in the second quarter of 2007 an additional $85,000.
      These liabilities are included in the over-earnings liability on the Company’s
      condensed consolidated balance sheet of June 30, 2007. The calculations
      supporting these liabilities are complex and involve a variety of projections
      and estimates before the ultimate settlement of such obligations. Estimates
      may
      be revised as expectations change and factors become known and
      determinable.





The
      2005
      and 2006 over-earnings liabilities are based on the Company’s best estimates,
      but the amounts could change upon the FPSC finalization expected in 2007 and
      2008. The FPSC determines the disposition of over-earnings with alternatives
      that include refunding to customers, increasing storm damage or environmental
      reserves or reducing any depreciation reserve deficiency. The FPSC staff issued
      a recommendation on August 2, 2007, and if approved, the overearnings for 2005
      will remain as currently estimated, and the disposition will be used to fund
      our
      storm reserve and eliminate the storm surcharge and the related regulatory
      asset
– storm reserve in our natural gas operations.





*Index*




**11.**
            **Environmental
                Contingencies**


The
      Company is subject to federal and state legislation with respect to soil,
      groundwater and employee health and safety matters and to environmental
      regulations issued by the Florida Department of Environmental Protection (FDEP),
      the United States Environmental Protection Agency (EPA) and other federal and
      state agencies. For full disclosure of the legal items that impact the Company,
      please refer to "Contingencies" in the Notes to Consolidated Financial
      Statements in the Company’s Form 10-K for the year ended December 31,
      2006.





**12.**
            **Reclassification**


Certain
      amounts in the 2006 financial statements have been reclassified to conform
      to
      the 2007 presentation.





**13.**
            **Financial
                Accounting Standard Board Interpretation No.
                48**


The
      Company accounts for uncertainty in income taxes in accordance with FASB
      Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48)
      and
      SFAS No. 109, Accounting for Income Taxes. The Company performed an analysis
      of
      tax positions taken and expected to be taken on the tax returns. The analysis
      concluded that the Company had no material uncertain tax
      positions.





The
      Interpretation requires Companies to accrue interest and penalties that would
      be
      incurred if an uncertain tax position ultimately were not sustained.  In
      such a case, the Company would start accruing interest and penalty in the period
      which gives rise to the uncertain tax position. The Company would classify
      interest and penalties in the income statement and balance sheet separately
      from
      other tax balances and based on expected timing of cash payment to the taxing
      authorities.





Under
      the
      tax statute of limitations applicable to the Internal Revenue Code and state
      taxes, we are no longer subject to examinations by the Internal Revenue Service
      or the State of Florida for years before 2003. However, because we are carrying
      forward income tax attributes, such as net operating losses and tax credits
      from
      2002 and earlier tax years, these attributes can still be audited when utilized
      on returns filed in the future.  As noted in Note 14, we have been
      notified of an IRS audit.





**14.**
            **IRS
                Examination**


In
      February of 2007, the IRS informed us that it has selected our 2003 and 2004
      tax
      years for examination.  As our tax positions have remained consistent with
      those from the previously audited tax years, we do not expect any material
      adverse findings as the result of the impending IRS audit.





**15.**
            **Employee
                Benefit Plans**


The
      Company sponsors a qualified defined benefit pension plan for non-union
      employees that were hired before January 1, 2005 and for unionized employees
      that work under one of the six Company union contracts and were hired before
      their respective contract dates in 2005. The Company also sponsors a
      postretirement medical plan.





The
      following table provides the components of the net periodic benefit cost for
      our
      pension plan and postretirement benefit plan for the three and six months ended
      June 30, 2006 and 2007.





*Index*




**FLORIDA
                  PUBLIC UTILITIES COMPANY****Net
                  Periodic Benefit Costs**(Dollars
                  in
                  thousands)**Three
                  Months Ended**
              
              
              **Six
                  Months Ended****June
                  30,**
              
              
              **June
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Pension
                  Plan:**Service
                  Cost
              
              $
              283
              
              
              $
              308
              
              
              $
              566
              
              
              $
              616Interest
                  Cost
              
              
              566
              
              
              
              524
              
              
              
              1,132
              
              
              
              1,048Expected
                  Return on Plan Assets
              
              
              (610
              )
              
              
              (603
              )
              
              
              (1,220
              )
              
              
              (1,206
              )Amortization
                  of Prior Service Cost
              
              
              184
              
              
              
              184
              
              
              
              368
              
              
              
              368Net
                  Periodic Pension Cost
              
              $
              423
              
              
              $
              413
              
              
              $
              846
              
              
              $
              826**Postretirement
                  Benefit Plan:**Service
                  Cost
              
              $
              16
              
              
              $
              25
              
              
              $
              32
              
              
              $
              50Interest
                  Cost
              
              
              26
              
              
              
              34
              
              
              
              52
              
              
              
              68Amortization
                  of Transition Obligation/(Asset) Obligation/(Asset)
              
              
              11
              
              
              
              11
              
              
              
              22
              
              
              
              22Amortization
                  of Net (Gain) or Loss
              
              
              (5
              )
              
              
              -
              
              
              
              (10
              )
              
              
              -Net
                  Periodic Postretirement Benefit Cost
              
              $
              48
              
              
              $
              70
              
              
              $
              96
              
              
              $
              140





For
      additional information related to our employee benefit plans, please see Note
      12
      to the Consolidated Financial Statements of the Company’s 10-K Annual
      Report.





In
      September, 2006, the FASB issued Statement No. 158 “Employers’ Accounting for
      Defined Benefit Pension and Other Postretirement Plans”. Statement 158 requires
      the Company to show the funded status of its pension and retiree health care
      plan as a prepaid asset or accrued liability, and to show the net deferred
      and
      unrecognized gains and losses related to the retirement plans, net of tax,
      as
      part of accumulated other comprehensive income (AOCI) in shareholders’ equity.
      Previously, the net deferred and unrecognized gains and losses were netted
      in
      the prepaid asset or accrued liability recorded for the retirement
      plans.





The
      Company initially adopted Statement 158 at December 31, 2006, as required and
      presented in the statement of shareholder’s equity in the most recent 10-K. This
      resulted in a transition adjustment, a loss, of $103,000 to the AOCI and was
      reported as a current adjustment in the statement of comprehensive income as
      opposed to an adjustment directly to AOCI. There were no other related or
      unrelated AOCI adjustments or balances prior to this adjustment.  The
      accumulated other comprehensive income (AOCI) as of June 30, 2007 is summarized
      as follows:





*Index*




**Statement
                  of Accumulated Other Comprehensive Income (AOCI)**
                (Dollars
                  in thousands)Balance
                  at December 31, 2005
              
              $
              -Adjustment
                  to ACOI:Retirement
                  obligations, net of tax
              
              
              (103
              )Balance
                  at December 31, 2006
              
              
              (103
              )Adjustment
                  to AOCI:Retirement
                  obligations, net of tax
              
              
              50Balance
                  at June 30, 2007
              
              
              (53
              )








**Item
      2.  Management’s Discussion and Analysis of Financial
      Condition and Results of Operations**





**Overview**


We
      have
      three primary business segments: natural gas, electric and propane gas. The
      Florida Public Service Commission (FPSC) regulates the natural gas and electric
      segments.





Earnings
      for 2007 are down significantly for the quarter and for the year to date
      compared to 2006 primarily because of milder weather.  The mild
      weather caused sales for all operating units – natural gas, electric and propane
      to be significantly under budget, thereby lowering income.  We also
      believe that conservation measures taken by our customers as a result of higher
      electric rates contributed to the decrease in electric sales.  In
      addition, over the past few years the housing market and construction industry
      in Florida has slowed down and caused our growth rate to be less than originally
      anticipated. Growth in customers helps increase revenue and usually offsets
      many
      of the expense increases.





We
      experienced appreciably higher than usual general liability claims this year
      as
      cases were settled in 2007. The number of claims was atypical related to our
      gas
      business and these increased expenses in 2007 by approximately $300,000 and
      decreased earnings per share approximately $.03 over the prior year to date.
      Management expects claims to return to normal levels for the remainder of 2007.
      Sarbanes Oxley requirements continue to increase our legal fees and accounting
      costs. These costs have increased significantly over the last five years for
      public companies and continue to negatively impact our earnings. Another item
      lowering our earnings was a revision in our estimate for 2005 natural gas
      over-earnings, which decreased our net income for 2007 by $53,000.





We
      expect
      a revenue increase beginning in late 2007 and additional increases in early
      2008
      as a result of our upcoming electric rate proceeding, which is expected to
      be
      filed with the Florida Public Service Commission (FPSC) in the third quarter
      of
      2007. Management is requesting recovery for many of the increases in our
      electric expenses as well as for additional costs to implement new requirements
      from the FPSC to strengthen power delivery systems in order to minimize damage
      caused by hurricanes.





*Index*




**Results
      of Operations**





**Revenues
      and Gross Profit Summary**


Revenues
      include cost recovery revenues. The FPSC allows cost recovery revenues to
      directly recover costs of fuel, conservation and revenue-based taxes in our
      natural gas and electric segments. Revenues collected for these costs and
      expenses have no effect on results of operations and fluctuations could distort
      the relationship of revenues between periods. Gross profit is defined as gross
      operating revenues less fuel, conservation and revenue-based taxes that are
      passed directly through to customers. Because gross profit eliminates these
      cost
      recovery revenues, we believe it provides a more meaningful basis for evaluating
      utility revenues. The following summary compares gross profit between periods
      and units sold in one thousand Dekatherm (MDth) (gas) and Megawatt Hour (MWH)
      (electric).





**Revenues
                  and Gross
                  Profit**(Dollars
                  and units in thousands)
              
              Three
                  Months Ended
                June
                  30,
              
              
              Six
                  Months Ended
                June
                  30,**2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Natural
                  Gas**Revenues
              
              $
              15,502
              
              
              $
              14,632
              
              
              $
              36,075
              
              
              $
              41,586Cost
                  of fuel and other pass through costs
              
              
              9,168
              
              
              
              8,402
              
              
              
              21,690
              
              
              
              26,957Gross
                  Profit
              
              $
              6,334
              
              
              $
              6,230
              
              
              $
              14,385
              
              
              $
              14,629Units
                  sold:  (MDth)
              
              
              1,447
              
              
              
              1,402
              
              
              
              3,287
              
              
              
              3,348Customers
                  (average for the period)
              
              
              51,737
              
              
              
              51,347
              
              
              
              51,747
              
              
              
              51,254**Electric**Revenues
              
              $
              13,135
              
              
              $
              11,815
              
              
              $
              26,493
              
              
              $
              23,511Cost
                  of fuel and other pass through costs
              
              
              9,590
              
              
              
              8,243
              
              
              
              19,489
              
              
              
              16,516Gross
                  Profit
              
              $
              3,545
              
              
              $
              3,572
              
              
              $
              7,004
              
              
              $
              6,995Units
                  sold: (MWH)
              
              
              200,298
              
              
              
              216,392
              
              
              
              385,934
              
              
              
              413,619Customers
                  (average for the period)
              
              
              31,066
              
              
              
              30,605
              
              
              
              31,004
              
              
              
              30,541**Propane
                  Gas**Revenues
              
              $
              3,831
              
              
              $
              3,528
              
              
              $
              8,512
              
              
              $
              8,288Cost
                  of fuel
              
              
              1,941
              
              
              
              1,831
              
              
              
              4,289
              
              
              
              4,216Gross
                  Profit
              
              $
              1,890
              
              
              $
              1,697
              
              
              $
              4,223
              
              
              $
              4,072Units
                  sold:  (MDth)
              
              
              143
              
              
              
              147
              
              
              
              335
              
              
              
              347Customers
                  (average for the period)
              
              
              13,274
              
              
              
              12,974
              
              
              
              13,327
              
              
              
              12,964**Consolidated**Revenues
              
              $
              32,468
              
              
              $
              29,975
              
              
              $
              71,080
              
              
              $
              73,385Cost
                  of fuel
              
              
              20,699
              
              
              
              18,476
              
              
              
              45,468
              
              
              
              47,689Gross
                  Profit
              
              $
              11,769
              
              
              $
              11,499
              
              
              $
              25,612
              
              
              $
              25,696Customers
                  (average for the period)
              
              
              96,077
              
              
              
              94,926
              
              
              
              96,078
              
              
              
              94,759




*Index*




***Three
      Months Ended June 30, 2007 Compared with Three Months Ended June 30,
      2006.***





**Revenues
      and Gross Profit**


*Natural
      Gas*


Natural
      gas service revenues increased by $870,000 in the second quarter of 2007 over
      the same period in 2006.  Revenues to recover our cost of fuel and
      other costs passed through to customers increased by $766,000.  These
      costs do not impact our gross profit. Our gross profit increased $104,000 or
      2%.  The increase in gross profit is attributable to a 3% increase in
      units sold in 2007, due primarily to a 1% increase in customer
      growth.





*Electric*


Electric
      service revenues increased by $1,320,000 in the second quarter of 2007 over
      the
      same period in 2006.  Primarily all of the increase was attributable
      to the cost of fuel and other costs that were passed through to customers.
      A new
      fuel contract in our Northeast division was effective January 1, 2007 and this
      increased the cost of fuel that was passed through to our customers. Gross
      profit was flat compared to the second quarter of 2006.  Despite an
      increase of 2% in customer growth, the usage per customer decreased by 5%,
      excluding our industrial customers, due to weather and possible conservation
      measures taken by our customers as a result of the recent fuel cost
      increases.





*Propane
      Gas*


Propane
      revenues increased $303,000 in the second quarter of 2007 compared to the same
      period in 2006.  Although we experienced a 3% decrease in units sold
      to customers this was offset by increased profit margins.





**Operating
      Expenses**


Operating
      expenses were higher by $739,000 in the second quarter of 2007 compared to
      the
      same period in 2006. Administrative and general expenses increased $425,000
      primarily due to an increase in recent unusual general liability claims.
      Management expects claims to return to a normal level for the remainder of
      2007.
      Additionally, we incurred increased expenses from cost of living raises and
      increased payroll expense for additional staff hired to improve natural gas
      customer service and collections. Customer account expenses increased $129,000
      in the second quarter of 2007 as a result of increased costs in meter readings
      and higher bad debt expenses.





**Other
      Income and Deductions**


Merchandise
      and service revenue decreased by $338,000 in the second quarter of 2007 compared
      to the same period last year. This was offset by a decrease in cost of
      merchandise and services of $337,000. The decrease in revenue was a result
      of
      the slowdown of new construction projects during the current downturn in the
      housing market.





The
      total
      interest expense increased $97,000 compared to the prior quarter primarily
      due
      to the revised estimate in the second quarter of 2007 for our natural gas
      over-earnings from 2005, and the related interest expense on our projected
      over-earnings.





**Income
      Taxes**


Income
      tax expense decreased in the second quarter of 2007 by $227,000 over the same
      period last year; primarily due to lower taxable income.





*Index*




***Six
      Months Ended June 30, 2007 Compared with Six Months Ended June 30,
      2006.***





**Revenues
      and Gross Profit**


*Natural
      Gas*


Natural
      gas service revenues decreased $5,511,000 in the six months ended June 30,
      2007
      over the same period in 2006.  As the cost of natural gas continues to
      decline, revenues to recover our cost of fuel and other costs passed through
      to
      customers decreased by $5,267,000.  These costs do not impact our
      gross profit. Our gross profit decreased by $244,000 or 2%.  The
      decrease in gross profit is attributable to a 2% decrease in units sold in
      2007
      due primarily to warmer weather resulting in lower usage per
      customer.  The down-turn in the housing market has also impacted the
      growth in the number of new residential customers.





*Electric*


Electric
      service revenues increased by $2,982,000 in the six months ended June 30, 2007
      over the same period in 2006.  Primarily all of the increase was
      attributable to the cost of fuel and other costs that were passed through to
      customers. A new fuel contract in our Northeast division was effective January
      1, 2007 and this increased the cost of fuel that was passed through to our
      customers. Gross profit was flat compared to the six months ending June 30,
      2006.  Although the number of customers increased by 2%, there was a
      6.7% decrease in units sold as a result of warmer weather and possible
      conservation measures taken by our customers due to the recent fuel
      increases.





*Propane
      Gas*


Propane
      revenues increased by $224,000 in the six months ended June 30, 2007 compared
      to
      the same period in 2006.  Although we experienced a 3.5% decrease in
      units sold to customers due to warmer weather; this was offset by increased
      profit margins.





**Operating
      Expenses**


Operating
      expenses were higher by $1,175,000 in the six months ended June 30, 2007
      compared to the same period in 2006. Administrative and general increased by
      $558,000; approximately $300,000 of the increase was due to recent unusual
      general liability claims in the second quarter of 2007. Management expects
      claims to return to normal levels for the remainder of 2007. Additionally,
      we
      incurred increased expenses of $325,000 from cost of living raises and increased
      payroll expense for additional staff hired to improve natural gas customer
      service and collections.  Similarly, customer account expenses
      increased by $239,000 as a result of increased costs in meter readings and
      higher bad debt expenses. As the divisions continue to grow, capital additions
      contributed to $200,000 in increased depreciation expense.





**Other
      Income and Deductions**


Merchandise
      and service revenue decreased by $649,000 in the six months ended June 30,
      2007
      compared to the same period last year. This was offset by a decrease in cost
      of
      merchandise and services of $712,000. The decrease in revenue was a result
      of
      the slow down of new construction projects during the current downturn in the
      housing market.





*Index*




The
      total
      interest expense increased $51,000 compared to the prior year to date primarily
      due to the revised estimate in the second quarter of 2007 for our natural gas
      overearnings from 2005, and the related interest expense on our projected
      overearnings.





**Income
      Taxes**


Income
      tax expense decreased in the six months ended June 30, 2007 by $484,000 over
      the
      same period last year primarily due to lower taxable income.





**Liquidity
      and Capital Resources**





**Cash
      Flows**


*Operating
      Activities*


Net
      cash
      flow provided by operating activities for the six months ended June 30, 2007
      decreased by approximately $5.2 million over the same period in 2006. The
      over-recovered fuel costs in 2006 and the related reduction in fuel costs and
      under-recovered fuel costs in 2007 accounted for approximately $6.8 million
      of
      the decrease in the current year’s net cash flow as compared to the prior
      year.





*Investing
      Activities*


Construction
      expenditures did not fluctuate significantly in the six months ended June 30,
      2007, decreasing by approximately $214,000 compared to the same period last
      year.





*Financing
      Activities*


Decreases
      in cash flow used in financing activities were mostly attributable to reductions
      in short-term loan payments.  As of June 30, 2007, we paid down our
      line of credit by $2.4 million as compared to $8.1 million as of June 30, 2006.
      The increase in fuel costs during the latter part of 2005 resulted in large
      fuel
      under-recoveries and therefore a higher dependence on short-term financing
      in
      the first quarter of 2006 compared to 2007.





**Capital
      Resources**


We
      have a
      $12 million line of credit (LOC), which expires on July 1, 2008. Upon 30 days
      notice by us we can increase the LOC to a maximum of $20 million. The LOC
      contains affirmative and negative covenants that, if violated, would give the
      bank the right to accelerate the due date of the loan to be immediately payable.
      The covenants include certain financial ratios. All ratios are currently within
      the required limits and management believes we are in full compliance with
      all
      covenants and anticipates continued compliance in the foreseeable future. We
      reserve $1 million of the LOC to cover expenses for any major storm repairs
      in
      our electric segment and an additional $250,000 for a letter of credit insuring
      propane facilities. As of June 30, 2007, the amount borrowed from the LOC was
      $1.1 million. At June 30, 2007, the LOC, long-term debt and preferred stock
      comprised 52% of total equity and debt capitalization.





*Index*




Our
      1942
      Indenture of Mortgage and Deed of Trust, which is a mortgage on all real and
      personal property, permits the issuance of additional bonds based upon a
      calculation of unencumbered net real and personal property. At June 30, 2007,
      such calculation would permit the issuance of approximately $40.8 million of
      additional bonds.





We
      have
      $3.4 million in invested funds for payment of future environmental costs. We
      expect to incur between $5.8 million and $19.1 million through the year ending
      December 31, 2021 for expenses related to environmental clean up.





There
      is
      over $6.4 million in receivables from the 2003 sale of our water assets, of
      which estimated installments of $300,000 are anticipated to be received in
      2008
      and in 2009.  The remaining balance of $5.8 million will be collected
      in 2010.  The present value of this receivable is $5.8
      million.





**Capital
      Requirements**


Portions
      of our business are seasonal and dependent on weather conditions in
      Florida.  The weather affects the sale of electricity and gas, and
      thereby impacts the cash provided by operations. Construction costs also impact
      cash requirements throughout the year. Cash needs for operations and
      construction are met partially through short-term borrowings from our
      LOC.





The
      Company purchased land for the initial construction of our South Florida
      division office on July 5, 2007 for a cost of $3.4 million. The current South
      Florida division office is located on environmentally impacted property, which
      requires relocating the office to allow for clean up of the property. We are
      planning to complete this new facility in the next two years.





Other
      commitments for capital expenditures for the remainder of 2007 consist of
      $775,000 for the purchase of a transformer and vehicle purchases totaling
      approximately $458,000.





Cash
      requirements are anticipated to increase significantly in the future due to
      additional environmental clean up costs, sinking fund payments on long-term
      debt
      and pension contributions. Environmental clean up costs are forecasted to be
      approximately $613,000 through 2007, with remaining payments totaling
      approximately $13.1 million, beginning in 2008 and ending in 2021. Annual
      long-term debt sinking fund payments of approximately $1.4 million will begin
      in
      2008 and will continue for eleven years. Current projections indicate that
      the
      company will make a voluntary contribution of $250,000 to its pension plan
      in
      2007. We may have significant pension contribution requirements for several
      years beginning with 2008 due to new pension funding rules. Starting January
      1,
      2005, we froze our defined benefit plan to new entrants.





Due
      to
      delayed environmental clean-up costs, we currently do not anticipate that any
      equity or debt financing in 2007 will be required. We believe that cash from
      operations, coupled with short-term borrowings on the LOC, will be sufficient
      to
      satisfy our operating expenses, normal capital expenditure requirements and
      dividend payments through spring of 2008.  However, cash requirements
      are forecasted to increase significantly in the future due to our environmental
      clean up costs, a land purchase, and sinking fund payments on long-term debt
      and
      pension contributions. If cash needs relating to the land purchase and related
      construction and the timing of environmental expenditures change, it is possible
      we may consider equity or debt financing.  The need and timing will
      depend upon the overall company cash flow requirements.  There can be
      no assurance, however, that equity or debt financing will be available on
      favorable terms, or at all, when we seek such financings.





*Index*




**Outlook**





***Electric
      Power Supply***


Contracts
      with our two electric suppliers were originally set to expire on December 31,
      2007.  Those long-term contracts provided electricity to our customers
      at rates much lower than current market rates.  As part of our
      negotiations, we agreed to end the current contract terms for our Northeast
      division on December 31, 2006 and executed an amended contract that began
      January 1, 2007 and will expire December 31, 2017.  Although the
      contract rates have increased for 2007, this enabled us to obtain lower rates
      for the new contract than would have been available if we had not revised the
      contract at December 31, 2006.  The savings are passed through to our
      customers without profit to us.





We
      executed a contract for the provider of electricity in our Northwest division
      in
      December 2006 and the contract was approved by the FPSC in July
      2007.  This contract will be for the purchase of electricity beginning
      January 1, 2008.





We
      anticipate that our new supply contracts will result in rates close to market,
      which we believe may cause our customers’ bills to double during 2008 over
      current prices.





We
      are
      unable to precisely estimate what impact the higher rates could have on electric
      consumption but we do feel it could be as much as a 10% reduction.





***Over-earnings-Natural
      Gas Segment***


The
      FPSC
      approves rates that are intended to permit a specified rate of return on
      investment and limits the maximum amount of earnings of regulated operations.
      We
      recorded estimated 2006 and 2005 over-earnings for the natural gas segment
      of
      $25,000 and $735,000, respectively.  We revised our estimate for the
      2005 overearnings in the second quarter of 2007 an additional $85,000. These
      liabilities have been included in the over-earnings liability on our balance
      sheet. The calculations supporting these liabilities are complex and involve
      a
      variety of projections and estimates before the ultimate settlement of such
      obligations. Estimates may be revised as expectations change and factors become
      known and determinable.





Our
      2005
      and 2006 estimates of our over-earnings liabilities could change upon the FPSC
      finalization of our earnings for 2007 and 2008. The FPSC determines the
      disposition of over-earnings with alternatives that include refunds to
      customers, funding storm damage or environmental reserves, or reducing any
      depreciation reserve deficiency.





*Index*




The
      FPSC
      staff issued a recommendation on August 2, 2007, and if approved, the
      overearnings for 2005 will remain as currently estimated, and the disposition
      will be used to fund our storm reserve and eliminate the storm surcharge and
      the
      related regulatory asset – storm reserve in our natural gas
      operations.








***Land
      Purchase***


We
      purchased land for $3.4 million in July 2007 for a new South Florida division
      office.  We are in the process of preparing plans for a building on this
      property and expect to begin construction in 2008.





***Storm
      Related Expenditures***


Regulators
      continue to focus on hurricane preparedness and storm recovery issues for
      utility companies. Newly mandated storm preparedness initiatives could impact
      our operating expenses and capital expenditures later in 2007. The initial
      forecasts of these annual expenditures are approximately $700,000. It is
      possible that additional regulation and rules will be mandated regarding storm
      related expenditures over the next several years. We requested that the FPSC
      allow us to recover the cost of the newly mandated storm preparedness
      initiatives and to defer these storm-related expenditures until we receive
      recovery through a rate increase. Several alternatives have been considered
      for
      recovery and implementation; however, in June 2007 the FPSC requested their
      staff to provide a new recommendation for implementation and recovery of these
      storm hardening measures at a later date. We expect the new recommendation
      by
      the FPSC staff later in 2007. If the new recommendation requires implementation
      beginning in the third or fourth quarter of 2007, it could have a significant
      effect on operating results. The recovery of these costs will be considered
      in
      our electric base rate proceeding expected to be filed in the third quarter
      of
      2007.





***Electric
      Base Rate Proceeding***


We
      plan
      to file a request with the FPSC in the third quarter of 2007 for a base rate
      increase in our electric segment. This request will include recovery of
      increased expenses and capital expenditures since our last rate proceeding
      in
      2004, as well as additional storm-related expenditures as discussed above.
      Finalization of this request and approval, if any, of an electric base rate
      increase would not occur until early 2008. Possible interim rate relief for
      partial recovery of the increased expenditures may occur in late
      2007.





**Forward-Looking
      Statements (Cautionary Statement)**


This
      report contains forward-looking statements including those relating to the
      following:





·
            Based
                on our current expectations for cash needs, including cash needs
                relating
                to the land purchase in July 2007 and the related construction, we
                may
                choose to consider an equity or debt
                financing.


·
            Our
                anticipation of continued compliance in the foreseeable future with
                our
                LOC covenants.





*Index*




·
            Our
                expectation that cash requirements will increase significantly in
                the
                future due to environmental clean-up costs, sinking fund payment
                on
                long-term debt and pension
                contributions.


·
            Our
                belief that cash from operations, coupled with short-term borrowings
                on
                our LOC, will be sufficient to satisfy our operating expenses, normal
                construction expenditure and dividend payments through spring of
                2008.


·
            Our
                2006 and 2005 over-earnings liability in natural gas will materialize
                as
                estimated.


·
            We
                expect higher fuel costs beginning in 2008 for our Northwest electric
                division.  We are unable to precisely estimate what impact the
                higher rates could have on electric consumption but we do feel it
                could be
                as much as a 10% reduction.


·
            Storm
                related expenditures may be necessary beginning in 2007 and the total
                cost
                may be significant. It may have a significant effect on operating
                results.


·
            We
                expect to file for an electric base rate increase in the third quarter
                of
                2007 and finalization is expected in early 2008.  Final rates,
                if approved by the FPSC, would not occur until
                2008.





These
      statements involve certain risks and uncertainties. Actual results may differ
      materially from what is expressed in such forward-looking statements. Important
      factors that could cause actual results to differ materially from those
      expressed by the forward-looking statements include, but are not limited to,
      those set forth in “Risk Factors” in our Form 10-K for the year ended December
      31, 2006.





**Item
      3.  Quantitative and Qualitative Disclosures about
      Market Risk**





All
      financial instruments held by us were entered into for purposes other than
      for
      trading.  We have market risk exposure only from the potential loss in
      fair value resulting from changes in interest rates. We have no material
      exposure relating to commodity prices because under our regulatory
      jurisdictions, we are fully compensated for the actual costs of commodities
      (natural gas and electricity) used in our operations. Any commodity price
      increases for propane gas are normally passed through monthly to propane gas
      customers as the fuel charge portion of their rate.





None
      of
      our gas or electric contracts are accounted for using the fair value method
      of
      accounting. While some of our contracts meet the definition of a derivative,
      we
      have designated these contracts as "normal purchases and sales" under SFAS
      No.
      133, "Accounting for Derivative Instruments and Hedging
      Activities".





On
      a
      rolling four-quarter basis, we will purchase a “cap” on approximately one-third
      of our forecast propane volume purchases and pre-buy or hedge with a swap
      one-third of our forecast anticipated propane purchases. The remaining one-third
      will fluctuate with the market price. Our energy strategy allows us to
      participate in two-thirds of price declines but only one-third of price
      increases. As of June 30, 2007, we have not entered into any hedging
      activities. When we do enter into hedging activities, we will determine whether
      they meet the definition of normal sales and purchases and if not, we will
      determine whether we can use hedge accounting.





*Index*




We
      have
      no exposure to equity risk, as we do not hold any equity instruments. Our
      exposure to interest rate risk is limited to investments held for environmental
      costs, the long-term notes receivable from the sale of our water division and
      short-term borrowings on the line of credit. The investments held for
      environmental costs are short-term fixed income debt securities whose carrying
      amounts are not materially different than fair value. The short-term borrowings
      were approximately $1.1 million at the end of June 2007. We do not believe
      we
      have material market risk exposure related to these instruments. The indentures
      governing our two first mortgage bond series outstanding contain "make-whole"
      provisions (pre-payment penalties that charge for lost interest), which render
      refinancing impracticable.





**Item4T. 
Controls
      and Procedures**





**Disclosure
      Controls and Procedures**


Our
      management carried out an evaluation, under the supervision and with the
      participation of our Chief Executive Officer and Chief Financial Officer, of
      the
      effectiveness of our disclosure controls and procedures (as defined in Rules
      13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation,
      the
      Chief Executive Officer and Chief Financial Officer as of June 30, 2007,
      concluded that our disclosure controls and procedures were effective, in that
      they provide reasonable assurance that information required to be disclosed
      by
      us in the reports that we file or submit under the Exchange Act is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms.





**Changes
      in Internal Control over Financial Reporting**


No
      change
      in our internal control over financial reporting (as defined in Rules 13a-15(f)
      and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended
      June 30, 2007 that has materially affected, or is reasonably likely to
      materially affect, our internal control over financial reporting.





**PART
      II.  OTHER INFORMATION**





**Item
      4.  Submission of Matters to a Vote of Security
      Holders**





The
      Company held its annual meeting of stockholders on May 8, 2007.  At
      that meeting, the stockholders were asked to consider and act on the
      following:





·
            Election
                of two 2 directors


·
            Ratification
                of the appointment of BDO Seidman, LLP, as the Company’s independent audit
                firm





The
      following people were elected as directors for terms expiring in 2010 and
      received the number of votes set forth opposite his respective
      name:





Nominee
              For
              Against/Withheld
              Broker
                  Non-votes
              AbstentionsRichard
                  C. Hitchins
              5,093,437
              377,184
              0
              0Troy
                  W. Maschmeyer, Jr.
              5,094,951
              375,670
              0
              0




*Index*




The
      following votes were cast to ratify appointment of the Company’s independent
      audit firm, BDO Seidman, LLP:





For
              Against/Withheld
              Broker
                  Non-votes
              Abstentions5,437,911
              16,248
              0
              16,461





**Item
                6.**
            **Exhibits**





3.1
            Amended
                Articles of Incorporation (incorporated herein by reference as Exhibit
                3.1
                to our quarterly report on Form 10-Q for the period ended June 30,
                2002).





3.2
            Amended
                By-Laws (incorporated herein by reference as Exhibit 3(ii) to our
                quarterly report on Form 10-Q for the period ended June 30,
                2002).





4.1
            Indenture
                of Mortgage and Deed of Trust of FPU dated as of September 1, 1942
                (incorporated by reference herein to Exhibit 7-A to Registration
                No.
                2-6087).





4.2
            Fourteenth
                Supplemental Indenture dated September 1, 2001 (incorporated by reference
                to exhibit 4.2 on our annual report on Form 10-K for the year ended
                December 31, 2001).





4.3
            Fifteenth
                Supplemental Indenture dated November 1, 2001 (incorporated by reference
                to exhibit 4.3 on our annual report on Form 10-K for the year ended
                December 31, 2001).





31.1
            Certification
                of Chief Executive Officer (CEO) per Section 302 of the Sarbanes-Oxley
                Act
                of 2002.





31.2
            Certification
                of Chief Financial Officer (CFO) per Section 302 of the Sarbanes-Oxley
                Act
                of 2002.





32
            Certification
                of Principal Executive Officer and Principal Financial Officer per
                Section
                906 of the Sarbanes-Oxley Act of
                2002.





10.1
            Agreement
                for the purchase of land in south Florida, dated July 5,
                2007.




*Index*




**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





**FLORIDA
      PUBLIC UTILITIES COMPANY**


(Registrant)








Date: August 13, 2007
              By:  /s/
                  George M. BachmanGeorge
                  M. BachmanChief
                  Financial Officer(Principal
                  Accounting Officer)




*Index*




**FLORIDA
      PUBLIC UTILITIES COMPANY**


**EXHIBIT
      INDEX**


Item
      Number








31.1
            Certification
                of Chief Executive Officer (CEO) per Section 302 of the Sarbanes-Oxley
                Act
                of 2002.





31.2
            Certification
                of Chief Financial Officer (CFO) per Section 302 of the Sarbanes-Oxley
                Act
                of 2002.





32
            Certification
                of Principal Executive Officer and Principal Financial Officer per
                Section
                906 of the Sarbanes-Oxley Act of
                2002.





10.1
            Agreement
                for the purchase of land in south Florida, dated July 5,
                2007.