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, 2007



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



For the transition period from ____________  to
______________



Commission File Number:  001-10608



FLORIDA PUBLIC UTILITIES COMPANY

(Exact name of registrant as specified in its charter)



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



401 South Dixie Highway,

West Palm Beach, Fl.  33401

(561) 832-0872

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

and principal place of business)



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



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

Large
accelerated filer  [  ]

Accelerated
filer [  ]

Non-accelerated
filer [X]



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



On
October 31, 2007, there were 6,182,983 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 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,    
|Revenues                                                                                                              | 2007               |  | 2006              |  | 2007      |  | 2006     
|Natural
gas                                                                                                           | $12,018            |  | $12,522           |  | $48,093   |  | $54,108  
|Electric                                                                                                              | 16,251             |  | 13,896            |  | 42,744    |  | 37,407   
|Propane
gas                                                                                                           | 3,372              |  | 3,117             |  | 11,884    |  | 11,405   
|Total
revenues                                                                                                        | 31,641             |  | 29,535            |  | 102,721   |  | 102,920  
|Cost of Fuel and
Other Pass Through Costs                                                                             | 20,579             |  | 18,548            |  | 66,047    |  | 66,237   
|Gross
Profit                                                                                                          | 11,062             |  | 10,987            |  | 36,674    |  | 36,683   
|                                                                                                                      |                    |  |                   |  |           |  |          
|Operating
Expenses                                                                                                    |                    |  |                   |  |           |  |          
|Operation
and maintenance                                                                                             | 6,854              |  | 7,055             |  | 21,470    |  | 20,751   
|Depreciation
and amortization                                                                                         | 2,025              |  | 1,915             |  | 6,128     |  | 5,818    
|Taxes
other than income taxes                                                                                         | 769                |  | 754               |  | 2,328     |  | 2,258    
|Total
operating expenses                                                                                              | 9,648              |  | 9,724             |  | 29,926    |  | 28,827   
|Operating Income                                                                                                      | 1,414              |  | 1,263             |  | 6,748     |  | 7,856    
|                                                                                                                      |                    |  |                   |  |           |  |          
|Other Income
and (Deductions)                                                                                         |                    |  |                   |  |           |  |          
|Merchandise
and service revenue                                                                                       | 682                |  | 985               |  | 2,349     |  | 3,301    
|Merchandise
and service expenses                                                                                      | (601)              |  | (876)             |  | (2,081)   |  | (3,068)  
|Other
income                                                                                                          | 233                |  | 149               |  | 529       |  | 433      
|Interest
expense                                                                                                      | (1,209)            |  | (1,137)           |  | (3,592)   |  | (3,469)  
|Total
other deductions  net                                                                                          | (895)              |  | (879)             |  | (2,795)   |  | (2,803)  
|Earnings Before
Income Taxes                                                                                          | 519                |  | 384               |  | 3,953     |  | 5,053    
|Income
Taxes                                                                                                          | (164)              |  | (49)              |  | (1,390)   |  | (1,759)  
|Net Income                                                                                                            | 355                |  | 335               |  | 2,563     |  | 3,294    
|Preferred Stock
Dividends                                                                                             | 7                  |  | 7                 |  | 21        |  | 21       
|Earnings For
Common Stock                                                                                             | $348               |  | $328              |  | $2,542    |  | $3,273   
|                                                                                                                      |                    |  |                   |  |           |  |          
|(Basic and
Diluted):                                                                                                  |                    |  |                   |  |           |  |          
|Earnings
Per Common Share                                                                                             | $0.06              |  | $0.05             |  | $0.42     |  | $0.55    
|                                                                                                                      |                    |  |                   |  |           |  |          
|Dividends
Declared Per Common Share                                                                                   | $0.1125            |  | $0.1075           |  | $0.3325   |  | $0.3183  
|                                                                                                                      |                    |  |                   |  |           |  |          
|Average
Shares Outstanding                                                                                            | 6,049,644          |  | 6,002,859         |  | 6,035,103 |  | 5,989,353
|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)                                                                                               
|                                                                                                                      |               |  |             
|ASSETS                                                                                                                | September 30, |  | December 31,
|                                                                                                                      | 2007          |  | 2006        
|Utility
Plant                                                                                                         |               |  |             
|Utility
Plant                                                                                                         | $200,296      |  | $188,968    
|Less
Accumulated depreciation                                                                                         | 63,263        |  | 59,757      
|Net
utility plant                                                                                                     | 137,033       |  | 129,211     
|                                                                                                                      |               |  |             
|Current
Assets                                                                                                        |               |  |             
|Cash                                                                                                                  | 3,275         |  | 84          
|Accounts
receivable                                                                                                   | 10,837        |  | 12,199      
|Allowance
for uncollectible accounts                                                                                  | (385)         |  | (429)       
|Unbilled
receivables                                                                                                  | 1,618         |  | 1,957       
|Notes
receivable                                                                                                      | 295           |  | 298         
|Inventories
(at average unit cost)                                                                                    | 4,256         |  | 4,120       
|Prepaid
expenses                                                                                                      | 1,101         |  | 963         
|Under-recovery
of fuel costs                                                                                          | 839           |  | 862         
|Income
tax prepayments                                                                                                | 351           |  | -           
|Deferred
income taxes-current                                                                                         | 775           |  | 418         
|Other
regulatory assets-environmental                                                                                 | 353           |  | 456         
|Other
regulatory assets-storm reserve                                                                                 | 10            |  | 228         
|Deferred
charges-current                                                                                              | 319           |  | 495         
|Investments
held for environmental costs-current                                                                      | 1,200         |  | 613         
|Total current
assets                                                                                                  | 24,844        |  | 22,264      
|                                                                                                                      |               |  |             
|Other
Assets                                                                                                          |               |  |             
|Investments
held for environmental costs                                                                              | 2,243         |  | 2,751       
|Other
regulatory assets-environmental                                                                                 | 7,459         |  | 7,828       
|Other
regulatory assets-storm reserve                                                                                 | -             |  | 42          
|Other
regulatory assets-retirement plans                                                                              | 137           |  | 587         
|Long-term
receivables and other investments                                                                           | 5,562         |  | 5,740       
|Deferred
charges                                                                                                      | 6,170         |  | 6,001       
|Goodwill                                                                                                              | 2,405         |  | 2,405       
|Intangible
assets (net)                                                                                               | 4,479         |  | 4,405       
|Total
other assets                                                                                                    | 28,455        |  | 29,759      
|Total
Assets                                                                                                          | $190,332      |  | $181,234    
|                                                                                                                      |               |  |             
|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)                                                                                               
|                                                                                                                     
|                                                                                                                      |               |  |             
|CAPITALIZATION
AND LIABILITIES                                                                                        | September 30, |  | December 31,
|                                                                                                                      | 2007          |  | 2006        
|Capitalization                                                                                                        |               |  |             
|Common
shareholders' equity                                                                                           | $48,723       |  | $47,572     
|Preferred
stock                                                                                                       | 600           |  | 600         
|Long-term
debt                                                                                                        | 49,342        |  | 50,702      
|Total
capitalization                                                                                                  | 98,665        |  | 98,874      
|                                                                                                                      |               |  |             
|Current
Liabilities                                                                                                   |               |  |             
|Line
of credit                                                                                                        | 9,248         |  | 3,466       
|Accounts
payable                                                                                                      | 8,464         |  | 10,279      
|Current
portion of long-term debt                                                                                     | 1,409         |  | -           
|Insurance
accrued                                                                                                     | 150           |  | 181         
|Interest
accrued                                                                                                      | 1,461         |  | 789         
|Other
accruals and payables                                                                                           | 3,901         |  | 3,023       
|Taxes
accrued                                                                                                         | 2,409         |  | 1,180       
|Over-earnings
liability                                                                                               | 25            |  | 722         
|Over-recovery
of fuel costs and other                                                                                 | 3,990         |  | 4,011       
|Customer
deposits                                                                                                     | 10,552        |  | 9,608       
|Total
current liabilities                                                                                             | 41,609        |  | 33,259      
|                                                                                                                      |               |  |             
|Other
Liabilities                                                                                                     |               |  |             
|Deferred
income taxes                                                                                                 | 17,490        |  | 17,436      
|Environmental
liability                                                                                               | 12,472        |  | 13,140      
|Regulatory
liability-storm reserve                                                                                    | 2,337         |  | 1,636       
|Regulatory
liabilities-other                                                                                          | 10,092        |  | 9,676       
|Other
liabilities                                                                                                     | 7,667         |  | 7,213       
|Total
other liabilities                                                                                               | 50,058        |  | 49,101      
|Total
Capitalization and Liabilities                                                                                  | $190,332      |  | $181,234    
|                                                                                                                      |               |  |             
|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,    
|                                                                                                                      | 2007              |  | 2006    
|                                                                                                                      |                   |  |         
|Net cash provided
by operating activities                                                                             | $12,428           |  | $19,341 
|                                                                                                                      |                   |  |         
|Investing
Activities                                                                                                  |                   |  |         
|Construction
expenditures                                                                                             | (13,446)          |  | (10,199)
|Proceeds
received on notes receivable                                                                                 | 371               |  | 602     
|Other                                                                                                                 | (404)             |  | 296     
|Net
cash used in investing activities                                                                                 | (13,479)          |  | (9,301) 
|                                                                                                                      |                   |  |         
|                                                                                                                      |                   |  |         
|Financing
Activities                                                                                                  |                   |  |         
|Net
increase (decrease) in short-term borrowings                                                                      | 5,782             |  | (7,871) 
|Dividends
paid                                                                                                        | (1,993)           |  | (2,551) 
|Other
increases                                                                                                       | 453               |  | 430     
|Net
cash provided by (used in) financing activities                                                                   | 4,242             |  | (9,992) 
|                                                                                                                      |                   |  |         
|Net increase in
cash                                                                                                  | 3,191             |  | 48      
|                                                                                                                      |                   |  |         
|Cash at beginning
of period                                                                                           | 84                |  | 695     
|                                                                                                                      |                   |  |         
|Cash at end of
period                                                                                                 | $3,275            |  | $743    
|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, 2007



1.

Basis
of Presentation

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



2.

Use
of Estimates

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



3.

Regulation

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



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



4.

Pledged
Assets

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



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,
2007, approximately $9.5 million of retained earnings were free of such
restriction and available for the payment of dividends. The Companys line of
credit agreement contains covenants that, if violated, could restrict or prevent
the payment of dividends. The Company is not in violation of these
covenants.



6.

Allowance
for Uncollectible Accounts

The
Company records an allowance for uncollectible accounts based on historical
information and trended current economic conditions.  The bad debt
write-offs of uncollectible accounts for the third quarter 2007 were $145,000
while the accrual of provisions was $123,000.



7.

Storm
Reserves

As
of September 30, 2007, the Company had a storm reserve of approximately $1.7
million for the electric segment and approximately $610,000 for the natural gas
segment. The Company does not have a storm reserve for the propane gas segment.
For additional information on the Companys storm reserve, see Note 10,
Over-earnings  Natural Gas Segment.



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 in 2007 and 2006 showed no
impairment for either reporting segment.



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



|                                             |                          |        
|-------------------------------------------- | ------------------------ | -------
|Intangible Assets
(Dollars in thousands)    
|                                             |                          | 2007   
|Customer
distribution rights                 | (Indefinite
life)        | $
1,900
|Customer
relationships                       | (Indefinite
life)        | 900    
|Software                                     | (Five to nine year
life) | 3,459  
|Accumulated
amortization                     | (1,780)                 
|Total
intangible assets, net of amortization | $
4,479                 



The
amortization expense of intangible assets was approximately $263,000 for the
nine months ended September 30, 2007.



9.

Common
Shareholders Equity

Items
impacting common shareholders equity other than income and dividends are the
dividend reinvestment program, employee stock purchase program, stock
compensation plans and treasury stock. The net impact of these additional items
increased common shareholders equity approximately $724,000 for the nine months
ended September 30, 2007.  Accumulated other comprehensive loss, comprised
of the deferred cost of employee benefit plans, totaled approximately $30,000
and $100,000 as of September 30, 2007 and December 31, 2006, respectively. The
change to other comprehensive loss for the quarter ending September 30, 2007 was
a net gain of approximately $25,000.



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.



The
Company has recorded estimated 2006 over-earnings for regulated natural gas
operations of $25,000. This liability is included in the over-earnings liability
on the Companys condensed consolidated balance sheet of September 30, 2007. The
calculations supporting these liabilities are complex and involve a variety of
projections and estimates before the ultimate settlement of such obligations.
Estimates may be revised as expectations change and factors become known and
determinable.



The
2006 over-earnings liability is based on the Companys best estimate, but the
amount could change upon the FPSC finalization expected in 2008. The FPSC
determines the disposition of over-earnings with alternatives that include
refunding to customers, increasing storm damage or environmental reserves or
reducing any depreciation reserve deficiency.



On
August 14, 2007 the Commission finalized the 2005 over-earnings for the natural
gas segment. Total over-earnings was determined to be $666,000, plus interest.
Interest on the over-earnings through September 30, 2007 was $76,000.



The
Commission ordered disposition of 2005 over-earnings to eliminate the related
regulatory asset  storm reserve in our natural gas operations and the storm
surcharge collected from customers. The remaining over-earnings was used 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. For full disclosure of the legal items that impact the Company,
please refer to "Contingencies" in the Notes to Consolidated Financial
Statements in the Companys Form 10-K for the year ended December 31, 2006.



12.

Reclassification

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



13.

Financial
Accounting Standard Board Interpretation No. 48

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



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



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



14.

IRS
Examination

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



15.

Employee
Benefit Plans

The
Company sponsors a qualified defined benefit pension plan for non-union
employees that were hired before January 1, 2005 and for unionized employees
that work under one of the six Company union contracts and were hired before
their respective contract dates in 2005.Employees
hired after December 31, 2004 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 and nine months ended
September 30, 2006 and 2007.



|                                                                 |                    |  |                   |  |           |  |          
|---------------------------------------------------------------- | ------------------ |  | ----------------- |  | --------- |  | ---------
|FLORIDA PUBLIC UTILITIES COMPANY                                
|Net Periodic Benefit Costs                                      
|(Dollars in
thousands)                                          
|                                                                 |                   
|                                                                 | Three Months Ended |  | Nine Months Ended
|                                                                 | September 30,      |  | September 30,    
|                                                                 | 2007               |  | 2006              |  | 2007      |  | 2006     
|                                                                 |                    |  |                   |  |           |  |          
|Pension Plan:                                                    |                    |  |                   |  |           |  |          
|Service
Cost                                                     | $
    224          |  | $
   303          |  | $
   790  |  | $
   919 
|Interest
Cost                                                    | 588                |  | 573               |  | 1,720     |  | 1,621    
|Expected Return on
Plan Assets                                   | (609)              |  | (614)             |  | (1,829)   |  | (1,820)  
|Amortization of
Prior Service Cost                               | 185                |  | 185               |  | 553       |  | 553      
|Curtailment                                                      |                    |  | (73)              |  |           |  | (73)     
|Net
Periodic Pension Cost                                        | $
   388           |  | $
  374           |  | $
1,234   |  | $
1,200  
|                                                                 |                    |  |                   |  |           |  |          
|                                                                 |                    |  |                   |  |           |  |          
|Post-retirement
Benefit Plan:                                    |                    |  |                   |  |           |  |          
|Service
Cost                                                     | $
     16          |  | $
    (5)         |  | $
     48 |  | $
     45
|Interest
Cost                                                    | 27                 |  | 11                |  | 79        |  | 79       
|Amortization of
Transition Obligation/(Asset) Obligation/(Asset) | 10                 |  | 10                |  | 32        |  | 32       
|Amortization of
Net (Gain) or Loss                               | (5)                |  | (13)              |  | (15)      |  | (13)     
|Net
Periodic Postretirement Benefit Cost                         | $
    48           |  | $
      3         |  | $
   144  |  | $
   143 
|                                                                 |                    |  |                   | 



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, 2006.



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



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



|                                                                           |       |            
|-------------------------------------------------------------------------- | ----- | -----------
|Statement of Accumulated Other Comprehensive
Income
(Dollars in thousands)
|                                                                           |       |            
|Balance at
December 31, 2005                                               |       | $
        -
|Adjustment
to ACOI:                                                        |       |            
|Retirement
obligations, net of tax                                         |       | (103)      
|Balance at
December 31, 2006                                               | (103)
|Adjustment
to AOCI:                                                        |      
|Retirement
obligations, net of tax                                         |       | 74         
|Balance at
September 30, 2007                                              | (29) 





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



Overview

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



Earnings
for 2007 are down significantly for the year compared to 2006 primarily because
of milder weather, causing sales of natural gas and propane to be less than last
year and significantly under budget.  Electric sales were also less than
projected for the year due to conservation measures taken by our customers as a
result of higher electric rates, and milder weather. A slow-down in the
construction industry has resulted in slower customer growth than anticipated.
  Growth in the number of customers and sales helps increase revenue
and offsets many expense increases.



We
experienced appreciably higher than usual general liability claims this year as
cases were settled in 2007. The number of claims was not typical for our gas
business and increased expenses in 2007 by approximately $488,000 or
approximately $.05 per share. Management expects claims to return to normal
levels for the remainder of 2007.  Increased legal and accounting costs
related to complying with Sarbanes-Oxley requirements and continued increases in
medical and pension costs continue to negatively impact our earnings as they
have over the last five years.



The
Company filed an electric rate proceeding with the Florida Public Service
Commission (FPSC) in the third quarter of 2007 to increase electric rates. 
An annual interim increase of approximately $800,000 has been approved beginning
in November 2007 and we expect an additional final rate increase in early 2008.
Management is requesting recovery for many of the electric expense increases, as
well as for additional costs to implement new FPSC requirements to strengthen
power delivery systems to minimize damage caused by future hurricanes.



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,
|                                          | 2007                             |  | 2006                            |  | 2007     |  | 2006    
|Natural
Gas                               |                                  |  |                                 |  |          |  |         
|Revenues                                  | $12,018                          |  | $12,522                         |  | $48,093  |  | $54,108 
|Cost of fuel and
other pass through costs | 6,587                            |  | 6,969                           |  | 28,277   |  | 33,926  
|Gross
Profit                              | $
5,431                          |  | $
5,553                         |  | $19,816  |  | $20,182 
|Units sold:
 (MDth)                       | 1,207                            |  | 1,240                           |  | 4,494    |  | 4,588   
|Customers (average
for the period)        | 50,987                           |  | 51,040                          |  | 51,492   |  | 51,183  
|Electric                                  |                                  |  |                                 |  |          |  |         
|Revenues                                  | $16,251                          |  | $13,896                         |  | $42,744  |  | $37,407 
|Cost of fuel and
other pass through costs | 12,231                           |  | 9,923                           |  | 31,720   |  | 26,439  
|Gross
Profit                              | $
4,020                          |  | $
3,973                         |  | $11,024  |  | $10,968 
|Units sold:
(MWH)                         | 245,000                          |  | 250,000                         |  | 631,000  |  | 664,000 
|Customers (average
for the period)        | 31,153                           |  | 30,686                          |  | 31,055   |  | 30,590  
|Propane
Gas                               |                                  |  |                                 |  |          |  |         
|Revenues                                  | $
 3,372                         |  | $
3,117                         |  | $11,884  |  | $11,405 
|Cost of
fuel                              | 1,761                            |  | 1,656                           |  | 6,050    |  | 5,872   
|Gross
Profit                              | $
 1,611                         |  | $
 1,461                        |  | $
5,834  |  | $
5,533 
|Units sold:
 (MDth)                       | 119                              |  | 124                             |  | 454      |  | 471     
|Customers (average
for the period)        | 13,144                           |  | 13,033                          |  | 13,265   |  | 12,987  
|Consolidated                              |                                  |  |                                 |  |          |  |         
|Revenues                                  | $31,641                          |  | $29,535                         |  | $102,721 |  | $102,920
|Cost of
fuel                              | 20,579                           |  | 18,548                          |  | 66,047   |  | 66,237  
|Gross
Profit                              | $11,062                          |  | $10,987                         |  | $36,674  |  | $36,683 
|Customers (average
for the period)        | 95,284                           |  | 94,759                          |  | 95,812   |  | 94,760  
|                                          |                                  |  |                                 |  |          |  |         



| |  |  |  |  |  |  | 
| |  |  |  |  |  |  | 





Three
Months Ended September 30, 2007 Compared with Three Months Ended September 30,
2006.



Revenues
and Gross Profit

Natural
Gas

Natural
gas service revenues decreased by $504,000 in the third quarter of 2007 from the
same period in 2006.  Revenues to recover our cost of fuel and other costs
passed through to customers decreased by $382,000.  These costs do not
impact our gross profit. Our gross profit decreased $122,000 or 2%.We experienced a 3% decrease in units sold in 2007,
primarily due to milder weather. The slump in the housing market has resulted in
slower customer growth than anticipated.



Electric

Electric
service revenues increased by $2,355,000 in the third quarter of 2007 over the
same period in 2006.  Most of the increase was attributable to the higher
cost of fuel and other costs that were passed through to customers. A new fuel
contract in our Northeast division was effective January 1, 2007 and increased
the cost of fuel charged to our customers. Gross profit this quarter increased
by $47,000 or 1% compared to the third quarter of 2006.  Despite an
increase of 2% in customer growth, the usage per customer, excluding industrial
customers, remained flat due to weather and possible conservation measures taken
by our customers as a result of the recent fuel cost increases.



Propane
Gas

Propane
revenues increased $255,000 in the third quarter of 2007 compared to the same
period in 2006.  Although there was a 4% decrease in units sold to
customers due to milder weather; this was offset by increased profit margins and
a 1% increase in customer growth.



Operating
Expenses

Operating
expenses were lower by $76,000 in the third quarter of 2007 compared to the same
period in 2006. We experienced a $335,000 reduction in other operating expenses
in part as a result of reduced sales expenses due to the slowdown in the housing
market and new construction. Additionally, maintenance expenses were $135, 000
lower this year due to less weather related tree trimming and maintenance of
electric lines in our electric divisions.   Offsetting these decreases
in expenses was an increase in administrative and general expenses of $299,000.
This was primarily due toan increase in recent
unusual general liability claims and an increase in auditing fees related to our
internal control over financial reporting.Management
expects general liability claims to return to a normal level for the remainder
of 2007.Depreciation remains as expected with an
increase of $121,000.



Other
Income and Deductions

Merchandise
and service revenue decreased by $303,000 in the third quarter of 2007 compared
to the same period last year. The income impact from this was partially offset
by a decrease of $275,000 in the cost of merchandise and services.The decrease in revenue and related cost was a result of
the slowdown of new construction projects during the current downturn in the
housing market.



Other
non-operating income increased $84,000 compared to the prior year due to income
generated from our sale of a tract of land at Rainbow Lakes.



Total
interest expense increased $72,000 compared to the 2006 third quarter primarily
due to the interest on additional funding used for the purchase of the Water
Tower Business Park for the relocation of our South Florida operations, and the
finalization and interest on our natural gas over-earnings from 2005 in the
third quarter of 2007.



Income
Taxes

Income
tax expense increased in the third quarter of 2007 by $115,000 over the same
period last year due to higher income in 2007. Outside of the impact of normal
taxes on net income, a portion of the increase was due to adjustments related to
the regulatory deferred tax liabilities in the prior year.



Nine
Months Ended September 30, 2007 Compared with Nine Months Ended September 30,
2006.



Revenues
and Gross Profit

Natural
Gas

Natural
gas service revenues decreased $6,015,000 in the nine months ended September 30,
2007 from the same period in 2006.As the cost
of natural gas continues to decline the related revenue to recover the fuel
related costs, which are passed through to customers, decreased by
$5,649,000.These costs passed through to
customers do not impact our gross profit. Our gross profit decreased by $366,000
or 2%.We experienced a 2% decrease in units
sold in 2007 primarily due to milder weather resulting in lower usage per
customer. The continued slump in the housing market also slowed the growth of
new customers.



Electric

Electric
service revenues increased by $5,337,000 in the nine months ended September 30,
2007 over the same period in 2006.  The increase was primarily attributable
to the cost of fuel and other costs that were passed through to customers. A new
fuel contract in our Northeast division was effective January 1, 2007 and this
increased the cost of fuel that was passed through to our customers. Gross
profit was flat compared to the nine months ending September 30, 2006.
 Although the number of customers increased by 2%, there was a 2% decrease
in units sold per customer, excluding industrial customers, as a result of
warmer weather and possible conservation measures taken by our customers due to
the recent fuel increases.



Propane
Gas

Propane
revenues increased by $479,000 in the nine months ended September 30, 2007
compared to the same period in 2006. Although we experienced a 3.6% decrease in
units sold to customers due to warmer weather; this was offset by increased
profit margins and service fees.



Operating
Expenses

Operating
expenses were higher by $1,099,000 in the nine months ended September 30, 2007
compared to the same period in 2006. Administrative and general expenses
increased by $857,000 of which approximately $488,000 was due to recent unusual
general liability claims expenses in the second and third quarter of 2007.
Management expects claims to return to normal levels for the remainder of 2007.
Additional increases for pension, medical and audit fees continued to negatively
impact 2007 compared to prior year. Additionally, we incurred increased expenses
of $354,000 from cost of living raisesand increased
payroll expense for additional staff hired to improve natural gas customer
service and collections.  Offsetting these increases was a $439,000
reduction in other operating expenses partly as a result of lower sales expense
in response to the slowdown in the housing market and construction industry. As
the divisions continue to grow, capital additions contributed to $310,000 in
increased depreciation expense.



Other
Income and Deductions

Merchandise
and service revenue decreased by $952,000 in the nine months ended September 30,
2007 compared to the same period last year. This was offset by a decrease in
cost of merchandise and services of $987,000. The decrease in revenue and
related costs were a result of the slow down of new construction projects during
the current downturn in the housing market.



Other
non-operating income increased $96,000 compared to the prior year primarily due
to income generated from the sale of a tract of land at Rainbow Lakes in the
third quarter of 2007.



The
total interest expense increased $123,000 compared to the prior year to date
primarily due to the interest on additional funding used for the purchase of the
Water Tower Business Park for the relocation of our South Florida operations in
the third quarter of 2007, and the finalization and interest on our natural gas
over-earnings from 2005 in the third quarter of 2007.  In addition to
carrying higher balances on our line of credit, the average interest rate also
increased from 5.9% in the prior year to 6.3% in 2007.



Income
Taxes

Income
tax expense decreased in the nine months ended September 30, 2007 by $369,000
over the same period last year primarily due to lower taxable income.



Liquidity
and Capital Resources



Cash
Flows



Operating
Activities

Net
cash flow provided by operating activities for the nine months ended September
30, 2007 decreased by approximately $6.9 million over the same period in 2006.
The over-recovered fuel costs collected in 2006 and subsequently refunded in
2007 as well as the related reduction in fuel costs and under-recovered fuel
costs in 2007 accounted for approximately $7.4 million of 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, 2007 increased by
approximately $3.2 million compared to the same period last year due primarily
to the purchase of land for the South Florida operations building.



Financing
Activities

Decreases
in cash flow used in financing activities were mostly attributable to reductions
in short-term loan payments.  As of September 30, 2007, we borrowed on our
line of credit $5.8 million as compared to payments of $7.9 million as of
September 30, 2006.  The increase in borrowing was due in part to increased
construction expenditures.



Capital
Resources

We
have a $12 million line of credit (LOC), which expires on July 1, 2008. Upon 30
days notice by us we can increase the LOC to a maximum of $20 million. The LOC
contains affirmative and negative covenants that, if violated, would give the
bank the right to accelerate the due date of the loan to be immediately payable.
The covenants include certain financial ratios. All ratios are currently within
the required limits and management believes we are in full compliance with all
covenants and anticipates continued compliance in the foreseeable future. We
reserve $1 million of the LOC to cover expenses for any major storm repairs in
our electric segment and an additional $250,000 for a letter of credit insuring
propane facilities. As of September 30, 2007, the amount borrowed from the LOC
was $9.2 million. At September 30, 2007, the LOC, long-term debt and preferred
stock comprised 55% of total equity and debt capitalization.



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,
2007, such calculation would permit the issuance of approximately $44.4 million
of additional bonds.



We
have $3.4 million in invested funds for payment of future environmental costs.
We expect to incur between $5.8 million and $19.0 million through the year
ending December 31, 2021 for expenses related to environmental cleanup.



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



Capital
Requirements

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



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



There
are no other material commitments for capital expenditures for the remainder of
2007.



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



Due
to delayed environmental clean-up costs, we currently do not anticipate that any
equity or debt financing in 2007 will be required. We believe that cash from
operations, coupled with short-term borrowings on the LOC, will be sufficient to
satisfy our operating expenses, normal capital expenditure requirements and
dividend payments through mid 2008.  We anticipate additional equity or
debt financing in mid 2008 to meet sinking fund payments on long-term debt and
pension contributions. We do not anticipate that environmental clean-up costs
for 2008 will exceed the amount held in reserve.   There can be no
assurance, however, that equity or debt financing will be available on favorable
terms, or at all, when we seek such financings.



Outlook



Electric
Power Supply

In
our Northeast division, we entered into a new long-term supply agreement that
began January 1, 2007 and will expire December 31, 2017.We executed a contract
for the provider of electricity in our Northwest division in December 2006 and
the contract was approved by the FPSC in July 2007.  This contract will be
for the purchase of electricity beginning January 1, 2008 and will expire
December 31, 2017.



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



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



Over-earnings
and Storm Reserve-Natural Gas Segment

On
August 14, 2007 the Commission finalized the disposition of 2005 over-earnings
for the natural gas segment. Total over-earnings was determined to be $666,000,
plus interest. Interest on the over-earnings through September 30, 2007 was
$76,000.



The
Commission ordered disposition of 2005 over-earnings to eliminate the related
regulatory asset  storm reserve in our natural gas operations and the storm
surcharge collected from customers. The remaining over-earnings was used to fund
a storm reserve for any future storm costs.  The storm reserve for our
natural gas division as of September 30, 2007 isapproximately $610,000.



We
recorded estimated 2006 over-earnings for the natural gas segment of $25,000.
 This liability has been included in the over-earnings liability on our
balance sheet. The calculations supporting these liabilities are complex and
involve a variety of projections and estimates before the ultimate settlement of
such obligations. Estimates may be revised as expectations change and factors
become known and determinable.



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



Medical
Insurance

Insurance
costs continue to experience increases. We expect to have significant increases
in our medical expenses for 2008. Management currently expects an increase of
25% to 35% or $447,000 to $622,000 over 2007 expenses.



Land
Purchase

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



Storm
Related Expenditures

Regulators
continue to focus on hurricane preparedness and storm recovery issues for
utility companies. Newly mandated storm preparedness initiatives could impact
our operating expenses and capital expenditures later in 2007. The initial
forecasts of these annual expenditures are approximately $700,000. It is
possible that additional regulation and rules will be mandated regarding storm
related expenditures over the next several years. We requested that the FPSC
allow us to recover the cost of the newly mandated storm preparedness
initiatives and to defer these storm-related expenditures until we receive
recovery through a rate increase. Several alternatives have been considered for
recovery and implementation; however, in June 2007 the FPSC requested their
staff to provide a new recommendation for implementation and recovery of these
storm hardening measures at a later date. We expect the new recommendation by
the FPSC staff in the fourth quarter of 2007 or early 2008. If the new
recommendation requires implementation beginning in the fourth quarter of 2007
or early 2008, it could have a significant effect on operating results. The
recovery of these costs will be considered in our electric base rate proceeding
filed in the third quarter of 2007.



Electric
Base Rate Proceeding

We
filed a request with the FPSC in the third quarter of 2007 for a base rate
increase in our electric segment. This request includes recovery of increased
expenses and capital expenditures since our last rate proceeding in 2004, as
well as additional storm-related expenditures as discussed above. Finalization
of this request and approval, if any, of an electric base rate increase would
not occur until early 2008.



Interim
rate relief for partial recovery of the increased expenditures was approved by
the Commission on October 23, 2007. Interim rates which will produce additional
annual revenues of approximately $800,000 will go into effect for meter readings
on and after November 22, 2007. The permanent rates may differ from the interim
rates, and the interim rates are collected subject to refund.



Land
Sale

In
our South Florida division, we are planning to sell property previously used for
a gate station.  Management expects this property to sell for approximately
$500,000 and expects to close on this sale before the end of 2007. Since this
property was held in our regulated operations, the gain on the sale will be
deferred pending the Commission decision on how the disposition of the gain will
be utilized. It is possible this gain will be used to offset future depreciation
expense through reduced rates or a five year amortization as a reduction to
depreciation expense.



Summer
Glen Conversion

In September we successfully completed the conversion
of 491 homes from propane to natural gas within a large gated community in our
West Florida Division.  The conversion will allow customers to take
advantage of lower natural gas rates and provide the company with greater
customer retention. The community is still in the process of building new homes
and on completion will result in 1,000 residential natural gas accounts.



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

·

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

·

We
expect higher fuel costs beginning in 2008 for our Northwest electric division
and this could have an impact on electric consumption of as much as a 10%
reduction.

·

Storm
hardening related expenditures may be necessary beginning in 2007 or early 2008
and the total cost may be significant. It may have a significant effect on
operating results.

·

Finalization
of an electric base rate increase is expected in early 2008.

·

Sale
of land in South Florida will occur as expected.

·

The
Summer Glen customer growth will occur as expected.



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



Item
3.

Quantitative
and Qualitative Disclosures about Market Risk



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



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



We
have decided not to utilize the previous plan of hedging through a combination
of purchasing caps and swaps.  We had tentatively decided to use a plan
that on a rolling four-quarter basis, we would have purchased a cap on
approximately one-third of our forecast propane volume purchases and to pre-buy
or hedge with a swap one-third of our forecast anticipated propane purchases.
 We decided to fluctuate with market or only utilize pre-purchased propane
gas. As of September 30, 2007, we had not entered into any hedging
activities.



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 $9.2 million at the end of September 2007. We do not believe
we have material market risk exposure related to these instruments. The
indentures governing our two first mortgage bond series outstanding contain
"make-whole" provisions (pre-payment penalties that charge for lost interest),
which render refinancing impracticable until sometime after 2010.



Item
4T.

Controls
and Procedures



Disclosure
Controls and Procedures

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



Changes
in Internal Control over Financial Reporting

No
change in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal
quarter ended September 30, 2007 that has materially affected, or is reasonably
likely to materially affect, our 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, 2006.



The
Company participates in energy conservation programs to provide incentives to
customers to conserve energy. There are a variety of programs in both our
electric and natural gas segments to encourage the conservation of energy. Costs
for these programs are passed directly through to our regulated customers and
are recovered through conservation rates.  These programs and costs are
reviewed and approved by the Florida Public Service Commission on an annual
basis.



If
conservation costs incurred are determined not to be appropriate for recovery
through conservation programs and rates, these costs would directly impact our
net operating income and could significantly decrease our earnings.



Item
6.

Exhibits



3.1

Amended
Articles of Incorporation (incorporated herein by reference as Exhibit 3(i) to
our quarterly report on Form 10-Q for the period ended June 30, 2002).



3.2

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



4.1

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



4.2

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



4.3

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



31.1

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



31.2

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



32

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



10.1

Agreement
for Firm Transportation Service with Florida Gas Transmission, for services
beginning 11/01/07, expiring 2/29/2016, Contract No. 107033.



10.2

Agreement
for Firm Transportation Service with Florida Gas Transmission, for services
beginning 11/1/07, expiring 3/31/2022, Contract No. 107034.



10.3

Agreement
for Firm Transportation Service with Florida Gas Transmission, for services
beginning 11/01/07, expiring 2/29/2016, Contract No. 107035.





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 14, 2007

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.



10.1

Agreement
for Firm Transportation Service with Florida Gas Transmission, for services
beginning 11/01/07, expiring 2/29/2016, Contract No. 107033.



10.2

Agreement
for Firm Transportation Service with Florida Gas Transmission, for services
beginning 11/01/07, expiring 3/31/2022, Contract No. 107034.



10.3

Agreement
for Firm Transportation Service with Florida Gas Transmission, for services
beginning 11/01/07, expiring 2/29/2016, Contract No 107035.