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 September 30, 2008



[  ] 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

(Address of principal executive offices)



(561) 832-0872

(Registrants telephone number, including area code)



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  [  ]



Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
 See the definitions of large accelerated filer, accelerated filer and
smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



Large
accelerated filer  [  ]

Accelerated
filer [  ]

Non-accelerated
filer [X]

Smaller
reporting company [  ]

(Do
not check if a smaller reporting company)



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



On
November 3, 2008, there were 6,199,070 shares of $1.50 par value common stock
outstanding.



INDEX



Part
I.

Financial
Information



Item 1.

Financial
Statements



Condensed Consolidated
Statements of Income

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated
Balance Sheets

Condensed Consolidated Statements of
Cash Flows

Notes to Condensed
Consolidated Financial Statements



Item 2.

Managements Discussion and Analysis of
Financial Condition



and Results of
Operations



Item
3.

Quantitative
and Qualitative Disclosures about Market Risk



Item 4T.

Controls and
Procedures



Part
II.

Other
Information



Item 1A.

Risk Factors



Item 6.

Exhibits



Signatures









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 |  | Nine Months Ended
|                                                                                                                      | September 30,      |  | September 30,    
|                                                                                                                      | 2008               |  | 2007              |  | 2008      |  | 2007     
|Revenues                                                                                                              |                    |  |                   |  |           |  |          
|Natural
gas                                                                                                           | $14,642            |  | $12,018           |  | $55,752   |  | $48,093  
|Electric                                                                                                              | 23,501             |  | 16,251            |  | 59,238    |  | 42,744   
|Propane
gas                                                                                                           | 3,791              |  | 3,372             |  | 13,350    |  | 11,884   
|Total
revenues                                                                                                        | 41,934             |  | 31,641            |  | 128,340   |  | 102,721  
|Cost of Fuel and
Other Pass Through Costs                                                                             | 30,071             |  | 20,579            |  | 90,334    |  | 66,047   
|Gross
Profit                                                                                                          | 11,863             |  | 11,062            |  | 38,006    |  | 36,674   
|                                                                                                                      |                    |  |                   |  |           |  |          
|Operating
Expenses                                                                                                    |                    |  |                   |  |           |  |          
|Operation
and maintenance                                                                                             | 7,205              |  | 6,854             |  | 22,099    |  | 21,470   
|Depreciation
and amortization                                                                                         | 2,189              |  | 2,025             |  | 6,648     |  | 6,128    
|Taxes
other than income taxes                                                                                         | 903                |  | 769               |  | 2,540     |  | 2,328    
|Total
operating expenses                                                                                              | 10,297             |  | 9,648             |  | 31,287    |  | 29,926   
|Operating Income                                                                                                      | 1,566              |  | 1,414             |  | 6,719     |  | 6,748    
|                                                                                                                      |                    |  |                   |  |           |  |          
|Other Income
and (Deductions)                                                                                         |                    |  |                   |  |           |  |          
|Merchandise
and service revenue                                                                                       | 540                |  | 682               |  | 1,796     |  | 2,349    
|Merchandise
and service expenses                                                                                      | (517)              |  | (601)             |  | (1,732)   |  | (2,081)  
|Other
income                                                                                                          | 268                |  | 233               |  | 568       |  | 529      
|Interest
expense                                                                                                      | (1,213)            |  | (1,209)           |  | (3,631)   |  | (3,592)  
|Total
other deductions  net                                                                                          | (922)              |  | (895)             |  | (2,999)   |  | (2,795)  
|Earnings Before
Income Taxes                                                                                          | 644                |  | 519               |  | 3,720     |  | 3,953    
|Income tax
expense                                                                                                    | (220)              |  | (164)             |  | (1,266)   |  | (1,390)  
|Net Income                                                                                                            | 424                |  | 355               |  | 2,454     |  | 2,563    
|Preferred Stock
Dividends                                                                                             | 7                  |  | 7                 |  | 21        |  | 21       
|Earnings For
Common Stock                                                                                             | $417               |  | $348              |  | $2,433    |  | $2,542   
|                                                                                                                      |                    |  |                   |  |           |  |          
|(Basic and
Diluted):                                                                                                  |                    |  |                   |  |           |  |          
|Earnings
Per Common Share                                                                                             | $0.07              |  | $0.06             |  | $0.40     |  | $0.42    
|                                                                                                                      |                    |  |                   |  |           |  |          
|Dividends
Declared Per Common Share                                                                                   | $0.1175            |  | $0.1125           |  | $0.3475   |  | $0.3325  
|                                                                                                                      |                    |  |                   |  |           |  |          
|Average
Shares Outstanding                                                                                            | 6,098,034          |  | 6,049,644         |  | 6,082,681 |  | 6,035,103
|These financial statements should be read with the
accompanying Notes to Condensed Consolidated Financial
Statements.











|                                                                                                                      |                                  |                                 |        |       
|--------------------------------------------------------------------------------------------------------------------- | -------------------------------- | ------------------------------- | ------ | ------
|CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(Dollars in thousands)                         
|                                                                                                                      | Three months ended September 30, | Nine months ended September 30,
|                                                                                                                      | 2008                             | 2007                            | 2008   | 2007  
|Net
income                                                                                                            | $424                             | $355                            | $2,454 | $2,563
|Other
comprehensive income                                                                                            |                                  |                                 |        |       
|Pension
and post retirement costs                                                                                     | 34                               | 40                              | 107    | 120   
|Income
tax expense on other
comprehensive
income                                                                      | (12)                             | (15)                            | (40)   | (45)  
|Comprehensive
income                                                                                                  | $446                             | $380                            | $2,521 | $2,638
|These
financial statements should be read with the accompanying Notes to
Condensed Consolidated Financial Statements.



|                                                                                                                      |               |  |             
|--------------------------------------------------------------------------------------------------------------------- | ------------- |  | ------------
|FLORIDA PUBLIC UTILITIES COMPANY                                                                                     
|CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)                                                                    
|(Dollars in thousands)                                                                                               
|                                                                                                                      |               |  |             
|                                                                                                                      | September
30, |  | December 31,
|                                                                                                                      | 2008          |  | 2007        
|ASSETS                                                                                                                |               |  |             
|Utility
Plant                                                                                                         |               |  |             
|Utility
Plant                                                                                                         | $208,653      |  | $202,384    
|Less
Accumulated depreciation                                                                                         | 67,462        |  | 64,012      
|Net
utility plant                                                                                                     | 141,191       |  | 138,372     
|                                                                                                                      |               |  |             
|Current
Assets                                                                                                        |               |  |             
|Cash                                                                                                                  | 2,130         |  | 3,478       
|Accounts
receivable                                                                                                   | 14,301        |  | 12,269      
|Allowance
for uncollectible accounts                                                                                  | (443)         |  | (326)       
|Unbilled
receivables                                                                                                  | 1,787         |  | 1,879       
|Notes
receivable                                                                                                      | 295           |  | 298         
|Inventories
(at average unit cost)                                                                                    | 4,530         |  | 4,251       
|Prepaid
expenses                                                                                                      | 1,183         |  | 861         
|Deferred
income taxes-current                                                                                         | 398           |  | 949         
|Income
tax prepayment                                                                                                 | 1,482         |  | -           
|Other
regulatory assets-environmental                                                                                 | 456           |  | 456         
|Deferred
charges-current                                                                                              | 331           |  | 399         
|Investments
held for environmental costs-current                                                                      | 3,487         |  | 3,444       
|Total
current assets                                                                                                  | 29,937        |  | 27,958      
|                                                                                                                      |               |  |             
|Other
Assets                                                                                                          |               |  |             
|Other
regulatory assets-environmental                                                                                 | 6,769         |  | 7,197       
|Long-term
receivables and other investments                                                                           | 5,514         |  | 5,622       
|Deferred
charges                                                                                                      | 6,331         |  | 6,360       
|Goodwill                                                                                                              | 2,405         |  | 2,405       
|Intangible
assets (net)                                                                                               | 4,153         |  | 4,430       
|Total
other assets                                                                                                    | 25,172        |  | 26,014      
|Total
Assets                                                                                                          | $196,300      |  | $192,344    
|                                                                                                                      |               |  |             
|These financial statements should be read with the
accompanying Notes to Condensed Consolidated Financial
Statements.







| |  |  | 
| |  |  | 



|                                                                                                                      |               |  |             
|--------------------------------------------------------------------------------------------------------------------- | ------------- |  | ------------
|FLORIDA PUBLIC UTILITIES COMPANY                                                                                     
|CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)                                                                    
|(Dollars in thousands)                                                                                               
|                                                                                                                     
|                                                                                                                      |               |  |             
|                                                                                                                      | September 30, |  | December 31,
|                                                                                                                      | 2008          |  | 2007        
|CAPITALIZATION
AND LIABILITIES                                                                                        |               |  |             
|Capitalization                                                                                                        |               |  |             
|Common
shareholders' equity                                                                                           | $49,859       |  | $48,946     
|Preferred
stock                                                                                                       | 600           |  | 600         
|Long-term
debt                                                                                                        | 47,975        |  | 49,363      
|Total
capitalization                                                                                                  | 98,434        |  | 98,909      
|                                                                                                                      |               |  |             
|Current
Liabilities                                                                                                   |               |  |             
|Line
of credit                                                                                                        | 11,133        |  | 11,122      
|Accounts
payable                                                                                                      | 11,166        |  | 9,901       
|Current
portion of long-term debt                                                                                     | 1,409         |  | 1,409       
|Insurance
accrued                                                                                                     | 190           |  | 218         
|Interest
accrued                                                                                                      | 1,667         |  | 1,163       
|Other
accruals and payables                                                                                           | 3,171         |  | 2,729       
|Environmental
Liability  current                                                                                     | 675           |  | 1,379       
|Taxes
accrued                                                                                                         | 3,129         |  | 2,168       
|Over-earnings
liability                                                                                               | -             |  | 26          
|Over-recovery
of fuel costs and other                                                                                 | 2,764         |  | 3,207       
|Customer
deposits                                                                                                     | 10,982        |  | 10,547      
|Total
current liabilities                                                                                             | 46,286        |  | 43,869      
|                                                                                                                      |               |  |             
|Other
Liabilities                                                                                                     |               |  |             
|Deferred
income taxes                                                                                                 | 16,767        |  | 16,896      
|Environmental
liability                                                                                               | 12,782        |  | 12,250      
|Regulatory
liability-storm reserve                                                                                    | 2,360         |  | 2,387       
|Regulatory
liabilities-other                                                                                          | 11,935        |  | 10,719      
|Other
liabilities                                                                                                     | 7,736         |  | 7,314       
|Total
other liabilities                                                                                               | 51,580        |  | 49,566      
|Total
Capitalization and Liabilities                                                                                  | $196,300      |  | $192,344    
|                                                                                                                      |               |  |             
|These financial statements should be read with the
accompanying Notes to Condensed Consolidated Financial
Statements.







|                                                                                                                      |                   |  |          | 
|--------------------------------------------------------------------------------------------------------------------- | ----------------- |  | -------- | 
|FLORIDA PUBLIC UTILITIES COMPANY                                                                                     
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)                                                          
|(Dollars in thousands)                                                                                               
|                                                                                                                      |                   |  |         
|                                                                                                                      | Nine Months Ended
|                                                                                                                      | September 30,    
|                                                                                                                      | 2008              |  | 2007    
|                                                                                                                      |                   |  |         
|Net cash provided
by operating activities                                                                             | $8,128            |  | $12,428 
|                                                                                                                      |                   |  |         
|Investing
Activities                                                                                                  |                   |  |         
|Construction
expenditures                                                                                             | (8,159)           |  | (13,446)
|Proceeds
received on notes receivable                                                                                 | 283               |  | 371     
|Other                                                                                                                 | (20)              |  | (404)   
|Net
cash used in investing activities                                                                                 | (7,896)           |  | (13,479)
|                                                                                                                      |                   |  |         
|                                                                                                                      |                   |  |         
|Financing
Activities                                                                                                  |                   |  |         
|Net
increase in short-term borrowings                                                                                 | 11                |  | 5,782   
|Dividends
paid                                                                                                        | (2,064)           |  | (1,993) 
|Other
increases                                                                                                       | 473               |  | 453     
|Net
cash (used in) provided by financing activities                                                                   | (1,580)           |  | 4,242   
|                                                                                                                      |                   |  |         
|Net (decrease)
increase in cash                                                                                       | (1,348)           |  | 3,191   
|                                                                                                                      |                   |  |         
|Cash at beginning
of period                                                                                           | 3,478             |  | 84      
|                                                                                                                      |                   |  |         
|Cash at end of
period                                                                                                 | $2,130            |  | $3,275  
|These financial statements should be read with the
accompanying Notes to Condensed Consolidated Financial
Statements.







FLORIDA PUBLIC UTILITIES COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 30, 2008



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, 2007.



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.



In
November 2007, the Companys electric segment received interim rate relief for
partial recovery of increased expenditures. These interim rates would produce
additional annual revenues of approximately $800,000 and went into effect for
meter readings on and after November 22, 2007.



In
April 2008, the FPSC approved the final annual electric rate increase of
approximately $3.9 million with the new rates beginning May 22, 2008.
 These revenues should provide an increase to the Companys overall
profitability for the electric segment and recovery of increased expenditures
including depreciation, storm readiness mandates and initiatives and other
expenses beginning in 2008.



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.



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 September 30,
2008, approximately $9.9 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 current economic conditions.  The following is a summary of
bad debt activity for the third quarter as of September 30:



|                                |      |     
|------------------------------- | ---- | ----
|Allowance for Doubtful Accounts
|(Dollars in thousands)         
|                                | 2008 | 2007
|Bad
Debt Write-offs             | $241 | $145
|Bad
Debt Accrual Provision      | $321 | $123



Our
natural gas operations had a significant write off in the third quarter of 2008
for a commercial customer who declared bankruptcy. The write-off and provision
was increased by $164,000 to account for this customer.



7.

Storm
Reserves

As
of September 30, 2008, the Company had a storm reserve of approximately $1.6
million for the electric segment and approximately $789,000 for the natural gas
segment. The Company does not have a storm reserve for the propane gas
segment.



On
September 29, 2008 the Commission finalized the 2006 over-earnings for the
natural gas segment. The total over-earnings was determined to be $160,000, plus
interest of $17,000. The Commission ordered disposition of 2006 over-earnings to
fund our natural gas storm reserve for any future storm costs.



The
electric segment had $295,000 in storm costs relating to Hurricane Fay in the
third quarter of 2008. These costs were funded by our storm reserve.



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 tests performed effective January 1, 2008
showed no impairment for either reporting segment.



Goodwill
associated with the Companys acquisitions consists of $550,000 in the natural
gas segment and $1.9 million in the propane gas segment. The summary of
intangible assets at September 30, 2008 and December 31, 2007, is as
follows:



|                                             |                          |                    |                  
|-------------------------------------------- | ------------------------ | ------------------ | -----------------
|Intangible Assets
(Dollars in thousands)    
|                                             |                          | September 30,
2008 | December 31,
2007
|Customer
distribution rights                 | (Indefinite
life)        | $
1,900            | $
1,900          
|Customer
relationships                       | (Indefinite
life)        | 900                | 900              
|Software                                     | (Five to nine year
life) | 3,539              | 3,499            
|Accumulated
amortization                     | (2,186)                  | (1,869)           
|Total
intangible assets, net of amortization | $
4,153                  | $ 4,430           



The
amortization expense of intangible assets was approximately $107,000 and $89,000
for the three months ended September 30, 2008 and 2007, respectively, and
$317,000 and $263,000 for the nine months ended September 30, 2008 and 2007,
respectively.



9.

Common
Shareholders Equity

Items
impacting common shareholders equity other than comprehensive 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$211,000 and
$527,000 for the three and nine months ended September 30, 2008, respectively.
 The impact to shares outstanding for these additional items was 18,200 and
44,274 for the three and nine months ending September 30, 2008, respectively.
 Accumulated other comprehensive income, comprised of the deferred cost of
employee benefit plans, totaled approximately $155,000 and $88,000 as of
September 30, 2008 and December 31, 2007, respectively. The change to other
comprehensive income for the quarter ending September 30, 2008 was a net gain of
approximately $22,000.



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.



Management
does not anticipate any natural gas over-earnings for 2007 or 2008.



On
September 29, 2008 the Commission finalized the 2006 over-earnings for the
natural gas segment. Total over-earnings was determined to be $160,000, plus
interest. Interest on the over-earnings through September 30, 2008 was
$17,000.



The
Commission ordered disposition of 2006 over-earnings to fund a storm reserve for
any future storm costs.



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. Except as discussed below, the Company does not expect to incur
material future expenditures for compliance with existing environmental laws and
regulations.



|                       |              |           
|---------------------- | ------------ | ----------
|(Dollars in thousands)
|Site                   | Range From   | Range To  
|West
Palm Beach        | $      4,900 | $   18,126
|Sanford                | 604          | 604       
|Pensacola
and Key West | 121          | 121       
|Total                  | $      5,625 | $   18,851



The
Company currently has $13.5 million recorded as our best estimate of the
environmental liability. The FPSC approved up to $14 million for total recovery
from insurance and rates based on the original 2005 projections as a basis for
rate recovery.  On October 18, 2004 the FPSC approved recovery of $9.1
million for environmental liabilities from rates.  The Company has
recovered a total of $6.3 million from insurance and rate recovery, net of costs
incurred to date.  The remaining balance of $7.2 million is recorded as a
regulatory asset.  The amortization of this recovery and reduction to the
regulatory asset began on January 1, 2005. The majority of environmental cash
expenditures is expected to be incurred before 2010, but may continue for
another 10 years.



West
Palm Beach Site

The
Company completed field investigations for the contamination assessment task in
October 2006.  Thereafter, we retained The RETEC Group, Inc. to perform a
feasibility study to evaluate appropriate remedies for the site to respond to
the reported soil and groundwater impacts.  On November 30,
2006, RETEC transmitted a feasibility study to us and to FDEP.  The
feasibility study evaluated a wide range of remedial alternatives. The
total costs for the remedies evaluated in the feasibility study ranged from a
low of $2.8 million to a high of $54.6 million.  Based on the likely
acceptability of proven remedial technologies described in the feasibility study
and implemented at similar sites, consulting/remediation costs are projected to
range from $4.6 million to $17.9 million. This range of costs covers such
remedies as in situ solidification for the deeper impacts, excavation of
surficial soils, installation of a barrier wall with a permeable
biotreatment zone, or some combination of these remedies.



By
letter dated May 7, 2007, FDEP provided its comments to the feasibility
study, the substance of which were discussed at a meeting between the Company
and FDEP on September 14, 2007.  A revised feasibility study was
submitted to FDEP on June 30, 2008.  We are currently awaiting FDEP's
comments to the response.



Based
on the information provided in the feasibility study, remaining legal
fees are currently projected to be approximately $269,000. Consulting and
remediation costs are projected to range from $4.6 million to $17.9
million. Thus, the Company's total probable legal and cleanup
costs for the West Palm Beach MGP site are currently
projected to range from $4.9 million to $18.1 million.



Sanford
Site

In late
September 2006, EPA sent a Special Notice Letter to the Company,
notifying us, and the other responsible parties at the site (Florida Power
Corporation, Florida Power & Light Company, Atlanta Gas Light Company, and
the City of Sanford, Florida, collectively with the Company, "the
Sanford Group"), of EPA's selection of a final remedy for OU1 (soils), OU2
(groundwater), and OU3 (sediments) for the site.  The total estimated
remediation costs for the Sanford Gasification Plant Site were projected by
EPA to be approximately $12.9 million.

In
January 2007, the Company along with other members of the Sanford Group
signed a Third Participation Agreement, which provides for funding
the final remedy approved by EPA for the site. Our share of remediation
costs under the Third Participation Agreement is set at five percent (5%)
of a maximum of $13 million, or $650,000, providing the total cost of
the final remedy does not exceed $13 million.  If the cost
of the final remedy does exceed $13 million, the Sanford Group members agreed to
negotiate in good faith at such time that it appears that the total cost will
exceed $13 million for the allocation of the additional cost.

An
initial call for funds under the Third Participation Agreement was sent to
all members of the Sanford Group on May 16, 2008, seeking funds totaling $2
million.  Our share of the initial call for funds was $100,000, or 5% of $2
million, which was paid by the Company to the Sanford Group Escrow Account in
June 2008.

The
Sanford Group, EPA and the United States Department of Justice entered into a
Consent Decree in March 2008 that was lodged with the federal court in
Orlando on March 28, 2008.  The Consent Decree provides for the
implementation by the Sanford Group of the remedy selected by EPA for
the site.  It is anticipated that the federal court will enter
the Consent Decree later in 2008.  The Sanford Group will then be obligated
to implement the remedy approved by EPA for the site.  It is
currently anticipated that the total cost of the final remedy will exceed $13
million. We have advised the other members of the Sanford Group that
we are unwilling at this time to agree to pay any sum in excess of the $650,000
committed by us in the Third Participation Agreement.

Several
members of the Sanford Group recently concluded negotiations with an
adjacent property owner, Christian Prison Ministries ("CPM"), for access to
CPM's property for the purpose of implementing a portion of the EPA-approved
remedy.  In the negotiations, CPM asserted that it will
incur damages as a result of the remedy and demanded that the Sanford Group
compensate CPM for such damages.  The Settlement Agreement with CPM
requires the select members of the Sanford Group to purchase the CPM
property for approximately $2 million.  CPM then has an option to buy
back the CPM property after completion of the remedy for approximately the same
amount.  The Company has refused to participate in the funding of
the CPM Settlement Agreement based on its contention that we did not
contribute to the release of hazardous substances at the site.

Remaining
legal fees/costs are currently projected to be approximately $54,000.
Our remaining obligation under the Third Participation Agreement is $550,000.
Thus, our total probable legal and cleanup costs for the Sanford MGP
site are currently projected to be approximately $604,000.



Pensacola
Site

We
are the prior owner/operator of the former Pensacola gasification plant, located
in Pensacola, Florida. Following notification on October 5, 1990 that FDEP had
determined that we were one of several responsible parties for any environmental
impacts associated with the former gasification plant site, we entered into cost
sharing agreements with three other responsible parties providing for the
funding of certain contamination assessment activities at the site.



Following
field investigations performed on behalf of the responsible parties, on July 16,
1997, FDEP approved a final remedy for the site that provides for annual
sampling of selected monitoring wells.  Such annual sampling has been
undertaken at the site since 1998.  The Companys share of these costs is
less than $2,000 annually.



In
March 1999, EPA requested site access in order to undertake an Expanded Site
Inspection.  The Expanded Site Inspection was completed by EPAs contractor
in 1999 and an Expanded Site Inspection Report was transmitted to the Company in
January 2000.  The Expanded Site Inspection Report recommends additional
work at the site.  The responsible parties met with FDEP on February 7,
2000 to discuss EPAs plans for the site.  In February 2000, EPA indicated
preliminarily that it will defer management of the site to FDEP; as of early
November 2008, the Company has not received any written confirmation from EPA or
FDEP regarding this matter.  Prior to receipt of EPAs written
determination regarding this site management, we are unable to determine whether
additional field work or site remediation will be required by EPA and, if so,
the scope or costs of such work.

Consulting
and remediation costs are projected to be $25,000; legal fees are projected to
be $3,000, for total probable costs for the Pensacola MGP site of $28,000.

Key
West Site

From
1927-1938, we owned and operated a gasification plant in Key West, Florida. The
plant discontinued operations in the late 1940s; the property on which the plant
was located is currently used for a propane gas distribution business. In March
1993, a Preliminary Contamination Assessment Report was prepared by a consultant
jointly retained by the current site owner and the Company and was delivered to
FDEP. The Preliminary Contamination Assessment Report reported that very limited
soil and groundwater impacts were present at the site. By letter dated December
20, 1993, FDEP notified us that the site did not warrant further "CERCLA
consideration and a Site Evaluation Accomplished disposition is recommended."
FDEP then referred the matter to its Marathon office for consideration of
whether additional work would be required by FDEP's district office under
Florida law. As of September 30, 2008, the Company has received no further
communication from FDEP with respect to the site.  At this time we are
unable to determine whether additional field work will be required by FDEP and,
if so, the scope or costs of such work.  In 1999, the Company received an
estimate from its consultant that additional costs to assess and remediate the
reported impacts would be approximately $166,000.  Assuming the current
owner shared in such costs according to the allocation agreed upon by the
parties for the Preliminary Contamination Assessment Report, the Companys share
of remediation expenses, plus attorneys fees and costs, is projected to be
$93,000 for this site.



12.

IRS
Examination

In
February 2008, the IRS completed its examination of our 2003 and 2004 federal
income tax returns.   We reclassified the tax liability recognized in
2007 as it related to this audit, and classified it as a current tax payable.
 We paid this tax liability and the interest on this liability of
approximately $195,000 and $48,000 respectively in July 2008.



The
Company amended its 2004 federal and Florida corporate income tax returns to
reflect the 2004 IRS audit adjustments.



In
July 2008, the IRS began their examination of our 2005 and 2006 tax years.
 The Company anticipates the 2005 and 2006 IRS examinations to be completed
in the fourth quarter of 2008.  Based on the progress of the examination to
date, we have estimated and recorded a net reduction of our tax liability in the
amount of $341,000 for the 2005 and 2006 tax years.  In addition, we
estimate and recorded the net interest on these adjustments to approximate
$30,000 for the 2005 and 2006 tax years.



These
adjustments are not anticipated to affect our annual effective income tax rate,
and should not result in a material change in our financial position.



The
Company intends to amend its 2005, 2006, and 2007 federal and Florida corporate
income tax returns to reflect the IRS audit adjustments later in 2008.



13.

Employee
Benefit Plans

The
Company sponsors a qualified defined benefit pension plan for non-union
employees 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 or in 2006 depending on the specific contract.
Employees hired after December 31, 2004 and union employees hired after the
above time frames are not eligible for the defined benefit pension plan and are
in a 401k match plan. The Company also sponsors a post-retirement 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 months and nine
months ended September 30, 2007 and 2008.





|                                                         |                    |  |                   |  |            |  |           | 
|-------------------------------------------------------- | ------------------ |  | ----------------- |  | ---------- |  | --------- | 
|FLORIDA PUBLIC UTILITIES COMPANY                        
|Net Periodic Benefit Costs                              
|(Dollars in
thousands)                                  
|                                                         |                   
|                                                         | Three Months Ended |  | Nine Months
Ended
|                                                         | September 30,      |  | September 30,    
|                                                         | 2008               |  | 2007              |  | 2008       |  | 2007     
|                                                         |                    |  |                   |  |            |  |          
|Pension Plan:                                            |                    |  |                   |  |            |  |          
|Service
Cost                                             | $
    239          |  | $
  224           |  | $      761 |  | $
    790
|Interest
Cost                                            | 583                |  | 588               |  | 1,937      |  | 1,720    
|Expected Return on
Plan Assets                           | (635)              |  | (609)             |  | (1,936)    |  | (1,829)  
|Amortization of
Prior Service Cost                       | 180                |  | 185               |  | 540        |  | 553      
|Net
Periodic Pension Cost                                | $
   367           |  | $
  388           |  | $1,302     |  | $
  1,234
|                                                         |                    |  |                   |  |            |  |          
|Postretirement
Benefit Plan:                             |                    |  |                   |  |            |  |          
|Service
Cost                                             | $
     11          |  | $
    16          |  | $
    39   |  | $
     48
|Interest
Cost                                            | 19                 |  | 27                |  | 78         |  | 79       
|Amortization of
Transition Obligation Obligation/(Asset) | 10                 |  | 10                |  | 32         |  | 32       
|Amortization of
Net Gain                                 | (25)               |  | (5)               |  | (37)       |  | (15)     
|Net
Periodic Postretirement Benefit Cost                 | $
   15            |  | $
    48          |  | $
  112    |  | $
  144  
|                                                         |                    |  |                   | 



These
components affect our pension and postretirement medical liability reserves with
current balances of approximately $3,642,000 and $1,685,000 respectively. For
additional information related to our employee benefit plans, please see Notes
to Consolidated Financial Statements in the Companys Form 10-K for the year
ended December 31, 2007. Approximately 80% of the net deferred and unrecognized
gains and losses relate to the regulated segment of the business and are
recoverable through regulatory assets.



FASB
issued Statement No. 158, Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans, that 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 (loss) (AOCI) in shareholders equity.The accumulated other comprehensive income is a gain of $155,000, net of
income tax effect of $93,000, at September 30, 2008 compared to a gain of
$88,000, net of income tax effect of $53,000, for December 31, 2007.Previously, the net deferred and unrecognized gains and
losses were included in the prepaid asset or accrued liability recorded for the
retirement plans.



14.

Impact
of Recent Accounting Standards

Financial
Accounting Standard No. 161

In
March 2008, the FASB issued Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities  an amendment of FASB Statement No.
133.

This
standard requires enhanced disclosures about an entitys derivative and hedging
activities and thereby improves the transparency of financial reporting. This
Statement is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008.   The Company
expects to adopt SFAS No. 161 effective January 1, 2009. The Company does not
anticipate the adoption of this standard will have a material effect on our
financial position or results of operation.



Financial
Accounting Standard No. 162

In
May 2008, the FASB issued Statement No. 162, The Hierarchy of Generally
Accepted Accounting Principles.  This standard offers guidance on the
principles used to prepare financial statements in accordance with GAAP.
 FASB Statements of Financial Accounting Concepts now supersede industry
practice. The Company does not anticipate the adoption of this standard will
have a material effect on our financial position or results of operation.



15.

Fair Value of Financial Instruments

In
September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements (SFAS 157), which defines fair value, establishes a
framework for measuring fair value in GAAP, and expands disclosures about fair
value measurements. SFAS 157 does not require any new fair value
measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the information. In February
2008, the FASB deferred the effective date of SFAS 157 by one year for
certain non-financial assets and non-financial liabilities, except those that
are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually). On January 1, 2008, we adopted the
provisions of SFAS 157, except as it applies to those nonfinancial assets
and nonfinancial liabilities for which the effective date has been delayed by
one year. The adoption of SFAS 157 did not have a material effect on our
financial position or results of operations.



On
January 1, 2008, we adopted the provisions of SFAS No. 159 The Fair
Value Option for Financial Assets and Financial Liabilities  including an
amendment of FASB Statement No. 115 (SFAS 159). SFAS 159
provides companies with an option to report selected financial assets and
financial liabilities at fair value. Unrealized gains and losses on items for
which the fair value option has been elected are reported in earnings at each
subsequent reporting date. The fair value option: (i) may be applied
instrument by instrument, with a few exceptions, such as investments accounted
for by the equity method; (ii) is irrevocable (unless a new election date
occurs); and (iii) is applied only to entire instruments and not to
portions of instruments. We did not elect to record any additional assets or
liabilities at fair value and accordingly, the adoption of SFAS 159 did not
have a material effect on our financial position or results of operations.



16.

Segment
Information

The
Company is organized into two regulated business segments, natural gas and
electric, and one non-regulated business segment, propane gas. There are no
material inter-segment sales or transfers.



Identifiable
assets are those assets used in the Companys operations in each business
segment.  Common assets are principally cash and overnight investments,
deferred tax assets and common plant.



Business
segment information at September 30, 2008, and December 31, 2007 is summarized
as follows:



|                       |   |         |   |         | 
|---------------------- | - | ------- | - | ------- | 
|(Dollars
in thousands) |   | 2008    |   | 2007    | 
|Identifiable
assets    |   |         |   |         | 
|Natural
gas            | $ | 99,275  | $ | 99,295  | 
|Electric               |   | 59,007  |   | 54,202  | 
|Propane
gas            |   | 19,008  |   | 19,371  | 
|Common                 |   | 19,010  |   | 19,476  | 
|Consolidated           | $ | 196,300 | $ | 192,344 | 



Business
segment information for the quarter ending and nine months ending September 30,
2008, and September 30, 2007 are summarized as follows:





|                                       |   |                                    |   |                                   |   |         |  |   |         |  |  |  |  |  | 
|-------------------------------------- | - | ---------------------------------- | - | --------------------------------- | - | ------- |  | - | ------- |  |  |  |  |  | 
|                                       |   | Three Months Ended   September 30, |   | Nine Months Ended   September 30, |   |        
|(Dollars
in thousands)                 |   | 2008                               |   | 2007                              |   | 2008    |  |   | 2007    | 
|Revenues                               |   |                                    |   |                                   |   |         |  |   |         | 
|Natural
gas                            | $ | 14,642                             | $ | 12,018                            | $ | 55,752  |  | $ | 48,093  | 
|Electric                               |   | 23,501                             |   | 16,251                            |   | 59,238  |  |   | 42,744  | 
|Propane
gas                            |   | 3,791                              |   | 3,372                             |   | 13,350  |  |   | 11,884  | 
|Consolidated                           | $ | 41,934                             | $ | 31,641                            | $ | 128,340 |  | $ | 102,721 | 
|Operating
income, excluding income tax |   |                                    |   |                                   |   |         |  |   |         | 
|Natural
gas                            | $ | (331)                              | $ | 86                                | $ | 2,286   |  | $ | 3,359   | 
|Electric                               |   | 1,740                              |   | 1,188                             |   | 3,341   |  |   | 2,185   | 
|Propane
gas                            |   | 157                                |   | 140                               |   | 1,092   |  |   | 1,204   | 
|Consolidated                           | $ | 1,566                              | $ | 1,414                             | $ | 6,719   |  | $ | 6,748   | 
|Depreciation
and amortization          |   |                                    |   |                                   |   |         |  |   |         | 
|Natural
gas                            | $ | 1,099                              | $ | 1,062                             | $ | 3,416   |  | $ | 3,270   | 
|Electric                               |   | 807                                |   | 682                               |   | 2,390   |  |   | 2,025   | 
|Propane
gas                            |   | 203                                |   | 204                               |   | 607     |  |   | 610     | 
|Common                                 |   | 80                                 |   | 77                                |   | 235     |  |   | 223     | 
|Consolidated                           | $ | 2,189                              | $ | 2,025                             | $ | 6,648   |  | $ | 6,128   | 
|Income
tax expense (benefit)           |   |                                    |   |                                   |   |         |  |   |         | 
|Natural
gas                            | $ | (383)                              | $ | (179)                             | $ | 24      |  | $ | 527     | 
|Electric                               |   | 511                                |   | 286                               |   | 824     |  |   | 427     | 
|Propane
gas                            |   | 53                                 |   | (2)                               |   | 283     |  |   | 239     | 
|Common                                 |   | 39                                 |   | 59                                |   | 135     |  |   | 197     | 
|Consolidated                           | $ | 220                                | $ | 164                               | $ | 1,266   |  | $ | 1,390   | 
|Construction
expenditures              |   |                                    |   |                                   |   |         |  |   |         | 
|Natural
gas                            | $ | 1,207                              | $ | 5,145                             | $ | 4,152   |  | $ | 8,717   | 
|Electric                               |   | 732                                |   | 1,032                             |   | 3,063   |  |   | 3,006   | 
|Propane
gas                            |   | 340                                |   | 632                               |   | 806     |  |   | 1,334   | 

|             |   |       |   |       |   |       |  |   |        |  |  |  |  |  | 
|------------ | - | ----- | - | ----- | - | ----- |  | - | ------ |  |  |  |  |  | 
|Common       |   | 131   |   | 100   |   | 138   |  |   | 389    | 
|Consolidated | $ | 2,410 | $ | 6,909 | $ | 8,159 |  | $ | 13,446 | 



17.

Accrued
Insurance

The
Company finalized and settled a general liability claim in September 2008. The
Company utilized a self insurance reserve to cover the Companys maximum
exposure relating to this claim for a total of $200,000.  The insurance
company will cover the remaining liability on this claim, and $657,000 has been
recorded as a receivable due from the insurance company at September 30, 2008.



18.

Reclassification

Certain
amounts in the 2007 financial statements have been reclassified to conform to
the 2008 presentation.





**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. The effects of seasonal weather conditions, timing of rate increases,
economic conditions, fluctuations in demand due to the cost of fuel passed on to
customers, and the migration of winter residents and tourists to Florida during
the winter season have a significant impact on income.



Earnings
for the quarter are slightly higher than the prior year, primarily due the
effects of the recent base rate increases in our electric divisions.
 Despite the reduction in units sold this year, electric gross profit
increased due to interim and final rate relief.  Interim rate relief of
approximately $800,000, annually, was approved beginning in November 2007. Final
electric base rate relief of approximately $3.9 million per year was approved in
April 2008 with new rates beginning May 22, 2008.



The
slump in the economy and higher prices for fuel have contributed to conservation
measures taken by our customers and the reduction in units sold in 2008 compared
to 2007. The new fuel contracts, effective January 1, 2007 in our Northeast
division, and effective January 1, 2008 in our Northwest division, significantly
increased our electricity fuel costs and revenues. We expect our electric
customers will continue to take conservation measures to help offset the recent
large fuel cost increases. We are unable to precisely estimate what impact the
higher rates could have on electric consumption, but we expect there could be as
much as a reduction of 10% in unit sales. Management does not expect a
significant impact to electric gross profit from this expected reduction in
sales units since this reduction was considered in our recent electric base rate
increase approved in April 2008 and the rates were changed to compensate for
this reduction in electric operations consumption.



Further
negative impacts from the continued decline in economic conditions, slowdown in
the housing industry and increased number of home foreclosures are expected to
further impact our units sold and customer counts over the remainder of 2008 and
into the following calendar year.  Management continues to look for ways to
help offset the negative impacts of the current economic condition. The Company
also expects to file a natural gas rate proceeding late 2008 to request base
rate relief in this operating segment.



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. We believe data regarding units sold and number of customers
provides additional information helpful in comparing periods.  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
September 30, |  | Nine Months Ended
September 30,
|                                          | 2008                             |  | 2007                            |  | 2008    |  | 2007   
|Natural
Gas                               |                                  |  |                                 |  |         |  |        
|Revenues                                  | $14,642                          |  | $12,018                         |  | $55,752 |  | $48,093
|Cost
of fuel and other pass through costs | 9,315                            |  | 6,587                           |  | 36,243  |  | 28,277 
|Gross
Profit                              | $
5,327                          |  | $
 5,431                        |  | $19,509 |  | $19,816
|Units sold:
 (MDth)                       | 1,164                            |  | 1,207                           |  | 4,343   |  | 4,494  
|Customers (average
for the period)        | 51,768                           |  | 50,987                          |  | 52,021  |  | 51,492 
|Electric                                  |                                  |  |                                 |  |         |  |        
|Revenues                                  | $23,501                          |  | $16,251                         |  | $59,238 |  | $42,744
|Cost
of fuel and other pass through costs | 18,567                           |  | 12,231                          |  | 46,420  |  | 31,720 
|Gross
Profit                              | $
4,934                          |  | $
4,020                         |  | $12,818 |  | $11,024
|Units sold:
(MWH)                         | 213,396                          |  | 245,000                         |  | 575,093 |  | 631,000
|Customers (average
for the period)        | 31,361                           |  | 31,153                          |  | 31,295  |  | 31,055 
|Propane
Gas                               |                                  |  |                                 |  |         |  |        
|Revenues                                  | $
 3,791                         |  | $
 3,372                        |  | $13,350 |  | $11,884
|Cost of
fuel                              | 2,189                            |  | 1,761                           |  | 7,671   |  | 6,050  







|                                   |          |  |          |  |          |  |         
|---------------------------------- | -------- |  | -------- |  | -------- |  | --------
|Gross
Profit                       | $
 1,602 |  | $
 1,611 |  | $
5,679  |  | $
5,834 
|Units sold:
 (MDth)                | 108      |  | 119      |  | 406      |  | 454     
|Customers (average
for the period) | 12,337   |  | 13,144   |  | 12,513   |  | 13,265  
|Consolidated                       |          |  |          |  |          |  |         
|Revenues                           | $41,934  |  | $31,641  |  | $128,340 |  | $102,721
|Cost of
fuel                       | 30,071   |  | 20,579   |  | 90,334   |  | 66,047  
|Gross
Profit                       | $11,863  |  | $11,062  |  | $38,006  |  | $36,674 
|Customers (average
for the period) | 95,466   |  | 95,284   |  | 95,829   |  | 95,812  
|                                   |          |  |          |  |          |  |         



Three
Months Ended September 30, 2008 Compared with Three Months Ended September 30,
2007.



Revenues
and Gross Profit



Natural
Gas

Natural
gas service revenues increased $2.6 million, or 22%, in the third quarter of
2008 from the same period in 2007 due to increased revenues to recover our cost
of fuel and other costs passed through to customers.



Units
sold and gross profit remained stable, both showing only marginal declines.
 The small declines in unit sales and decreased usage per customer is most
likely due to conservation measures taken by customers as a result of the
overall downturn in the economy.



We
recorded additional 2006 over-earnings of $135,000 which reduced revenues and
gross profit in the third quarter of 2008. The Commission approved finalization
of the 2006 over-earnings on September 29, 2008 and ordered the Company fund its
natural gas storm reserve to offset any future storm costs.



Electric

Electric
revenues increased $7.3 million in the third quarter of 2008 over the same
period in 2007.Higher cost of fuel and other costs
that were passed through to customers accounted for $6.3 million of this
increase. A new fuel contract in our Northwest division effective January 1,
2008, significantly increased the cost of fuel to market rates.



Gross
profit this quarter increased by $914,000 or 23% compared to the third quarter
of 2007 primarily due to the interim base rate increase effective November 2007
and the final base rate increase effective May 22, 2008. Other factors impacting
gross profit were a 1% increase in customer growth offset by an 11% decrease in
usage per customer, excluding our two large industrial customers.



Management
believes the decrease in usage per customer relates to conservation measures
taken by our customers as a result of the recent increases in fuel and base
rates and the downturn in the economy.  Gross profit was not impacted by
the reduction in sales units as this was considered in our recent electric base
rate increase approved in April 2008.



Propane
Gas

Propane
revenues increased $419,000 in the third quarter of 2008 compared to the same
period in 2007.   Increases to our propane rates covered the $428,000
increase to cost of gas sold and offset the 6% decrease in customers and 9%
decrease in units sold.



This
decrease in customers is primarily due to the recent conversion of approximately
500 customers in our Central Florida division from the use of propane to natural
gas. This conversion, warmer weather, and possibly conservation measures taken
by our customers reduced the number of units sold.



Operating
Expenses

Operating
expenses increased $649,000 in the third quarter of 2008 as compared to the same
period in 2007.  In addition to the inflationary impact to operating
expenses, maintenance expenses increased $188,000primarily as a result of our increased tree trimming efforts in our
electric segments.



Bad
debt expense increased $194,000 in the third quarter of 2008 compared to the
prior year as we continue to feel the impact of the declining economy on our
operating results. We experienced a large write off and accrual of $164,000 for
bad debt for a commercial customer bankruptcy in our natural gas segment.



Sales
expense for the third quarter of 2008 was lower than this same period in 2007 as
we reduced the number of sales staff and other related sales expense as a
primary result of the slow-down in the construction industry.



Depreciation
and amortization expense increased by $164,000 in the third quarter of 2008
compared to the same period in 2007 primarily due to new plant additions in our
operating segments, along with increased electric depreciation rates that were
effective January 1, 2008.



Other
Income and Deductions

Merchandise
and service revenues and expense decreased by $142,000 and $84,000,
respectively, in the third quarter of 2008 compared to the same period last
year. We continue to experience a decrease in merchandise sales and expenses as
the effects of the slowdown of new construction and housing projects
continue.



Total
interest expense remained relatively flat in the third quarter of 2008 compared
to the same period last year.



Nine
Months Ended September 30, 2008 Compared with Nine Months Ended September 30,
2007.



Revenue
and Gross Profit

Natural
Gas

Natural
gas service revenues increased $7.7 million in the nine months ended September
30, 2008 over the same period in 2007. Higher cost of fuel in the nine months
ended September 2008 compared to this same period in 2007 increased revenues to
recover our cost of fuel and other costs passed through to customers by $8.0
million.



Our
gross profit decreased by $307,000 in 2008 compared to 2007. Although customers
increased primarily due to the recent conversion of customers located in our
Central Florida division from the use of propane to natural gas, units decreased
3% and usage per customers decreased 4% compared to the prior year. This unit
decrease is most likely due to weather and possibly conservation measures taken
by our customers due to higher fuel costs and the down-turn in the housing
market and economy as a whole.



We
recorded additional 2006 over-earnings of $135,000 which reduced revenues and
gross profit in the third quarter of 2008. The Commission approved finalization
of the 2006 over-earnings on September 29, 2008 and ordered the Company fund its
natural gas storm reserve to offset any future storm costs.



Electric

Electric
service revenues increased by $16.5 million in the nine months ended September
30, 2008 over the same period in 2007.  Most of the increase was
attributable to the cost of fuel and other costs of $14.7 million that were
passed through to customers.A new fuel contract in
our Northwest division was effective January 1, 2008 and this increased the cost
of fuel that was passed through to our customers.



Gross
profit increased by $1.8 million in the nine months ended September 30, 2008
compared to the same period in 2007 due to the interim base rate increase
effective November 2007 and the final base rate increase effective May 2008.
 Although the number of customers increased by 1%, there was a 6% decrease
in units sold, excluding two industrial customers, as a result of possible
conservation measures taken by our customers and the overall down-turn in the
economy. Gross profit was not materially impacted from the reduced consumption
as this was considered in our recent electric base rate increase approved in
April 2008.  Rates were set to compensate for the anticipated reduction in
units sold.



Propane
Gas

Propane
revenues increased by $1.5 million in the nine months ended September 30, 2008
compared to the same period in 2007. The cost of fuel that was passed through to
our customers accounted for the increase in revenues.



Gross
profit decreased by 3% due to lower profit margins on commercial bulk accounts,
warmer weather, and possibly customer conservation due to the down-turn in the
economy. The conversion of approximately 500 customers from propane to natural
gas in September 2007 also reduced customers and units sold in this segment.
  In addition, an inventory loss adjustment resulted in increased cost
of sales expense of $108,000 over the prior period.



Operating
Expenses

Operating
expenses were higher by $1,361,000 in the nine months ended September 30, 2008
compared to the same period in 2007. Administrative and general expenses
increased by $492,000 primarily due to an increase of approximately $500,000 in
nonrecurring professional fees and expenses incurred in the second quarter of
2008 related to strategic development activity no longer ongoing. The impact to
net income for the effects of these nonrecurring administrative and general
expenses is $308,000 after income taxes or $.05 per share for the year to date
ending September 30, 2008. Outside of the normal inflationary impacts on our
expenses, maintenance expenses increased in 2008 primarily as a result of
increased tree trimming efforts in our electric segments. The cost for pension
and medical benefits continues to rise and negatively impacted 2008 compared to
the prior year.



Bad
debt expense increased $257,000 in the nine months ended September of 2008
compared to the prior year as we continue to feel the impact of the declining
economy on our operating results.We experienced a
large write off and accrual for bad debt of $164,000 for a commercial bankruptcy
in our natural gas segment during the third quarter of 2008.



As
a partial offset to increases in operating expenses, our general liability
reserve expense in 2008 was lower compared to the prior year by $391,000. In
2007 we had unusually high general liability related claims and expenses. Sales
expense also decreased $301,000 in 2008 compared to the prior year due to a
reduction in sales staff and other related sales expense resulting from the
slow-down in the construction industry and the overall economy.



As
the divisions continue to grow, capital additions and new electric depreciation
rates contributed to a $520,000 increase in depreciation expense. The new
electric depreciation rates are expected to increase annual depreciation expense
by approximately $280,000 in 2008.  A portion of the 2008 depreciation rate
increase was not recovered in 2008 through the increased electric base rates due
to the timing of final rate recovery.



Other
Income and Deductions

Merchandise
and service revenue decreased by $553,000 in the nine months ended September 30,
2008 compared to the same period last year. This was offset by a decrease in
cost of merchandise and services of $349,000. The decrease in revenue was a
result of the slowdown of new construction projects during the current down-turn
in the housing market.



The
total interest expense remained flat compared to the prior year to date.



Income
Taxes

Income
tax expense decreased in the nine months ended September 30, 2008 by $124,000
over the same period last year primarily due to lower book income.



Liquidity
and Capital Resources



Cash
Flows

Operating
Activities

Net
cash flow provided by operating activities for the nine months ended September
30, 2008 decreased by approximately $4.3 million over the same period in 2007.
 The timing of the receipt of increased customer accounts receivables due
to the recent fuel price increases significantly contributed to this decrease.
Prepaid taxes increased $1.1 million and over-recovered fuel costs collected in
2007 and subsequently refunded in 2008 were $445,000, both contributing to the
decrease in the current years net cash flow as compared to the prior year.



Investing
Activities

Construction
expenditures in the nine months ended September 30, 2008 decreased by $5.3
million compared to the same period last year. This decrease is due primarily to the purchase of
land for $3.5 million in July 2007 for the future construction of the South
Florida operations facility.  In addition there has been a significant
reduction in expenditures for distribution facilities and installations this
year as a result of the slowdown in the construction industry and economy.



Financing
Activities

The
cash provided by short-term loan borrowings decreased by $5.8 million in the
nine months ended September 30, 2008.  In the prior year, we borrowed on
our line of credit while in the current year our short term debt has remained
relatively unchanged for the past nine months.



Capital
Resources

We
have a line of credit with Bank of America which expires July 1, 2010.  In
March 2008, we amended our line of credit to allow us, upon 30 days notice, to
increase our available credit line to a maximum of $26 million, from the
previous maximum of $20 million. The amendment also reduces the interest rate
paid on borrowings by 0.10% or 10 basis points.  Effective April 29, 2008,
we increased the available line of credit from $12 million to $15 million. The
line of credit 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 met. Management believes we are in full compliance with all
covenants and anticipates continued compliance.



We
reserve $1 million of the line of credit to cover expenses for any major storm
repairs in our electric segment and an additional $250,000 for a letter of
credit insuring propane gas facilities. As of September 30, 2008, the amount
borrowed on the line of credit was $11.1 million. The line of credit, long-term
debt and preferred stock as of September 30, 2008 comprised 55% of total debt
and equity capitalization.



Historically
we have periodically paid off short-term borrowings under lines of credit using
the net proceeds from the sale of long-term debt or equity securities.  We
continue to review our financing options including increasing our short-term
line of credit, issuing equity or issuing debt. The choice of financing will be
dependent on prevailing market conditions, the impact to our financial covenants
and the effect on income. The timing of additional funding needs will be
dependent on projected environmental expenditures, building of the South Florida
operations facility, pension contributions and other capital expenditures.



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 September
30, 2008, such calculation would permit the issuance of approximately $49
million of additional bonds.



On
October 14, 2008 we received approval from the FPSC to issue and sell or
exchange an additional amount of $45 million in any combination of
long-term debt, short-term notes and equity securities and/or to assume
liabilities or obligations as guarantor, endorser or surety during calendar year
2009.



We
have $3.5 million in invested funds for payment of future environmental costs.



There
is approximately $6.1 million in receivables from the 2003 sale of our water
assets, of which an estimated installment of $300,000 is anticipated to be
received in 2009.  The remaining balance of $5.8 million will be collected
in 2010.  The present value of this receivable is $5.8 million.



We
also received a $244,000 legal claim reimbursement in April 2008 from our
insurance company to reimburse us on a liability claim.  The Company has
recorded a receivable of $657,000 due to an unrelated insurance claim which we
anticipate will be received in November, 2008.



Capital
Requirements

Portions
of our business are seasonal and dependent upon weather conditions in Florida.
This factor affects the sale of electricity and gas and 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 line of credit.



Capital
expenditures are expected to be higher for the remainder of 2008 compared to the
same period in 2007 by approximately $200,000, primarily as a result of a land
purchase for additional parking in our Central Florida division.



We
currently have approximately $600,000 in commitments for capital expenditures
for the remainder of 2008. These commitments include vehicles for approximately
$400,000 and land in our Central Florida division for approximately $200,000.



Cash
requirements will increase significantly in the future due to environmental
cleanup costs, sinking fund payments on long-term debt and pension
contributions. Environmental cleanup is forecast to require payments of
approximately $210,000 in 2008, with remaining payments, which could total
approximately $13.2 million, beginning in 2009. Annual long-term debt sinking
fund payments of approximately $1.4 million began in May 2008 and will continue
for eleven years. The Company made a voluntary contribution in our defined
benefit pension plan of $400,000 in 2008 for the 2007 plan and we will continue
in future years to make contributions as required by the Pension Protection Act
funding rules. As a result of the current economic climate and the impact to the
stock market investments held within our pension plan, future contributions to
our defined benefit pension plan are expected to increase. Annually contribution
payments are expected to range between approximately $2.0 million and $6.5
million in each of the next five years beginning in 2009, averaging about $4.0
million.



Based
on our current expectations, management believes that additional financing may
be necessary within the next twelve months.  The timing will be dependent
on operational requirements, environmental expenditures, pension contributions
and construction expenditures.  If we experience significant environmental
or construction expenditures we may need to raise additional funds by mid 2009.
  Equity financing may be considered as we strive to maintain a
balanced capital structure between debt and equity over the long term. There can
be no assurance, however, that equity financing will be available on
favorable terms or at all when we make the decision to proceed with a financing
transaction.



Outlook



Medical
Insurance

Insurance
costs are expected to increase in 2009 over 2008 by approximately 6%.  To
arrive at the 6% figure, management did need to make subtle plan structure
changes to mitigate expected claims expense.  In future years we expect to
experience medical claims above the industry average and forecast the increases
to be slightly above the industry average.  The Company will continue to be
more proactive and will continue to identify healthcare options that will help
control our overall medical costs and strive to improve our employees health.



Pension
Reserve

The
pension liability reserve included in Other Liabilities on our balance
sheet increased approximately $362,000 in the first nine months of
2008.  In partial response to the current economic climate and the
impact to the stock market investments held within our pension plan, our
pension liability reserve may increase even further in 2009.



Land
Purchases

We
purchased land for $3.5 million in July 2007 for a new South Florida operations
facility.  We are in the process of preparing plans for a building on this
property and expect to complete construction within the next one to
three years.



We
have a commitment to purchase additional land for approximately $200,000
adjacent to our Central Florida operations facility for additional parking. We
expect to close on this land purchase during the fourth quarter of 2008.



Storm
Related Expenditures

Regulators
continue to focus on hurricane preparedness and storm recovery issues for
utility companies. Newly mandated storm preparedness initiatives will impact our
operating expenses and capital expenditures in 2008.  Storm hardening
initiatives, recently mandated by the FPSC, will increase other electric
operating expenses for the remainder of 2008. However, we received recovery of
these storm related expenses in our recent electric base rate proceeding, and
management does not expect a negative impact to our 2008 earnings as a result of
these mandates. It is possible that additional regulation and rules will be
mandated regarding storm related expenditures over the next several years.



Electric
Base Rate Proceeding

Interim
rate relief for partial recovery of the increased expenditures was approved by
the FPSC on October 23, 2007. Interim rates which will produce additional annual
revenues of approximately $800,000 went into effect for meter readings on and
after November 22, 2007.



A
final annual electric rate increase of approximately $3,900,000 a year was
approved in April 2008, with the new rates beginning May 22, 2008.  These
revenues should provide an increase to our overall profitability for the
electric segment and recovery of increased expenditures including depreciation,
storm readiness mandates and initiatives and other expenses beginning in 2008.



Natural
Gas Base Rate Proceeding

We
plan to file a request with the FPSC in the fourth quarter of 2008 for a base
rate increase in our natural gas segment. This request will include recovery of
increased expenses and some capital expenditures since our last rate proceeding
in 2004. Finalization of this request and approval, if any, of a natural gas
base rate increase would not occur until mid 2009. Possible interim rate relief
for partial recovery of the increased expenditures may occur in early 2009.



Energy
Efficiency Legislation

Regulators
are focusing on several legislative issues involving the Energy Policy Act of
2005 and the Energy Independence and Security Act of 2007 and related
issues.  One major provision is the implementation of a renewable portfolio
standard.   Since the Company is a non-generating utility with
existing ten year all-requirements wholesale energy contracts, there is
significant concern over the additional purchased power cost that may be
required to comply with the standard.  Although this cost may be passed on
to the customers through a rate increase, continued decrease in customer usage
will have an impact on operations.  Smart Grid Technology is another item
being considered that would require significant capital investment to develop,
install and manage.  The Company understands the overall benefits from the
legislation but the burden imposed on a small utility like ours is of particular
concern.  The Company is continuing to communicate with the FPSC to find
solutions that will work for the Company, while maintaining manageable electric
rates for customers.



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
construction of the South Florida operations building, we may choose to consider
an equity or debt financing.

·

Our
anticipation of continued compliance in the foreseeable future with our line of
credit covenants.

·

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 line
of credit, will be sufficient to satisfy our operating expenses, normal
construction expenditure and dividend payments through 2008.

·

Realization
of actual additional revenues from the May 2008 electric base rate increase will
occur as expected.

·

Earnings
continue to be impacted by the overall economic conditions and management
expects the slow-down to continue through 2008 and into 2009 with ongoing impact
to our customer growth rates, unit sales and sales expense.

·

Storm
hardening initiatives recently mandated by the FPSC will increase other electric
operating expenses for the remainder of 2008 and management does not expect a
negative impact to our 2008 earnings as a result of these mandates due to the
recent base rate proceeding.

·

We
do not expect any material adverse findings as a result of the IRS audit of 2005
and 2006 tax years.

·

The
Natural Gas Rate Proceeding will be filed by the end of 2008 and finalization of
this request and approval, if any, of a natural gas base rate increase would not
occur until mid 2009.

·

Possible
interim rate relief for partial recovery of the increased expenditures may occur
in early 2009.

·

The
new electric depreciation rates are expected to increase annual depreciation
expense by approximately $280,000 in 2008.

·

Capital
expenditures are expected to be higher for the remainder of 2008 compared to the
same period in 2007 by approximately $200,000.

·

The
South Florida operations facility will begin construction as anticipated.

·

Medical insurance costs are expected to increase 10%
to 15% in 2009 over 2008.

·

The pension liability reserve and contributions to our
defined benefit pension plan are expected to increase in 2009 and beyond as
expected as a result of the economic climate and stock market
investments.

·

Energy Efficiency Legislation could impact our Company
and our operating results.





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, 2007 and in this Form 10-Q.



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".



We
have decided to suspend our previous plan of hedging through a combination of
purchasing caps and swaps.  We had decided to use a plan that, on a rolling
four-quarter basis, would have purchased a cap on approximately one-third of
our forecast propane volume purchases, performed a pre-buy or hedge with a swap
for one-third of our forecast anticipated propane purchases, and bought
one-third at market.  We are now fluctuating with the market or utilizing
pre-purchased propane gas. As of September 30, 2008, we had not entered into any
hedging activities or pre-purchased gas supplies.



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 $11.1 million at the end of September 30, 2008. 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 until sometime after 2010.



Item
4T.

Controls
and Procedures



Disclosure
Controls and Procedures

In
accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an
evaluation, under the supervision and with the participation of management,
including our CEO and CFO, of the effectiveness of our disclosure controls and
procedures as of September 30, 2008. Based on that evaluation, our CEO and CFO
have concluded that, as of September 30, 2008, our disclosure controls and
procedures were effective.



Changes
in Internal Control over Financial Reporting

There
have not been any changes in the Companys internal control over financial
reporting during the fiscal quarter ended September 30, 2008 that have
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.



PART
II.

OTHER
INFORMATION



Item
1A.

Risk
Factors



The
risk factors should be read in conjunction with those included in our most
recent Form 10-K for the year ending December 31, 2007.



The
financial performance of Florida Public Utilities Company may be adversely
affected if its divisions are unable to successfully operate their facilities.



Florida
Public Utilities Companys financial performance depends on the successful
operation of its electric, natural gas and propane facilities. Operating these
facilities involves many risks, including:





operator
error or failure of equipment or processes;





operating
limitations that may be imposed by environmental or other regulatory
requirements;





labor
disputes;





fuel
or material supply interruptions;





compliance
with mandatory reliability standards; and





catastrophic
events such as fires, earthquakes, explosions, floods, droughts, hurricanes,
terrorist attacks, pandemic health events such as an avian influenza, or other
similar occurrences.



A
decrease or elimination of revenues from any one of our facilities or an
increase in the cost of operating the facilities would reduce the net income and
cash flows and could adversely impact the financial condition.



We
are vulnerable to interest rate changes and may not have access to capital at
favorable rates, if at all.



Changes
in interest rates can affect our cost of borrowing on our line of credit, on
refinancing of debt maturities and on incremental borrowing to fund new
investments. Current market conditions could severely limit our future ability
to have access to capital. Because our stock is not widely held and has a low
trading volume, we may not be able to access the equity market or may be limited
in the amount of equity financing. If we are unable to obtain equity or debt
financing on satisfactory terms, our ability to fund capital expenditures and
other commitments will be impaired. Moreover, even if available, the capital may
not be available on favorable terms and the cost of such financing could reduce
our margins and materially adversely affect our results of operations.



General
economic conditions may adversely affect our unit sales.



Our
segments are affected by general economic conditions. The consumption of the
energy we supply is directly tied to the economy. Consumers conserve energy
consumption as costs go up and the economy worsens.  This adversely affects
our unit sales.  A downturn in the economy in our local areas of
operations, as well as on the state, national and international levels, could
adversely affect the performance of our segments. As the down-turn in the
economy affects consumer spending, tourism in Florida may be adversely affected.
If tourism is down, then the demand for the energy we supply is reduced.





Item
6.

Exhibits



3.1

Restated
Articles of Incorporation (incorporated herein by reference as Exhibit 3.2 on
Form 8-K filed November 10, 2008).



3.2

Restated
By-Laws (incorporated herein by reference as 3.1 on Form 8-K filed November 10,
2008).



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).



10.1
#

Employment
Agreement between the Company and John T. English dated August 21, 2008
(incorporated by reference to Exhibit 10.1 to our Form 8-K, filed on August 21,
2008).



10.2
#

Employment
Agreement between the Company and Charles L. Stein dated August 21, 2008
(incorporated by reference to Exhibit 10.2 to our Form 8-K, filed on August 21,
2008).



10.3
#

Employment
Agreement between the Company and George M. Bachman dated August 21, 2008
(incorporated by reference to Exhibit 10.3 to our Form 8-K, filed on August 21,
2008).



10.4

Amended
and restated Electric Service Contract by and between the Company and JEA dated
November 6, 2008 (incorporated by reference to Exhibit 10.1 to our Form 8-K
filed on November 12, 2008).



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.



#

Denotes
management contract or compensatory plan or arrangement





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: November 12, 2008

By: /s/ George M. Bachman

George
M. Bachman

Chief
Financial Officer

(Principal
Accounting Officer)









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.