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 report), 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 an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  [  ]     No  [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

Yes  [  ]     No  [X]

On October 27, 2005, there were 5,960,601 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 4.

Controls and Procedures

Part II.

Other Information

Item 6.

Exhibits

Signatures

PART I - Financial Information

Item 1.

Financial Statements

FLORIDA PUBLIC UTILITIES COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 30, 2005

1.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (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, 2004.

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, unbilled revenue, and over earnings.  Actual results may differ from these estimates and assumptions.

3.

Reclassification

Certain amounts in the 2004 financial statements have been reclassified to conform to the 2005 presentation.

4.

Collateralized Assets

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

5.

Restriction on Dividends

Florida Public Utilities’ (FPU) Fifteenth Supplemental Indenture of Mortgage and Deed of Trust restricts the amount that is available for cash dividends.  At September 30, 2005, approximately $7.1 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.

Summary of Revenues and Operating Income before Income Taxes

The following is a summary of revenues and operating income before income taxes:

7.

Allowance for Doubtful Accounts   

The Company records an allowance for doubtful accounts based on historical information and trended current economic conditions.

8.

Storm Related Impacts

In October 2005, the Florida Public Service Commission (FPSC) approved recovery of the Company’s 2004 natural gas storm costs plus interest and revenue-based taxes over a 30-month period beginning November 2005.  The Company deferred 2004 storm costs of $517,000 plus interest of $12,000 as a regulatory asset due from customers on the balance sheet. The FPSC disallowed a portion of the Company’s deferred storm costs.  These disallowed costs increased operating expenses by $37,000 and net utility plant by $22,000 in the third quarter of 2005.

See the table below for a summary of the natural gas regulatory asset related to storm along with a summary of the natural gas storm costs and interest as of September 30, 2005.

The FPSC approved application of $118,000 of 2002 natural gas over earnings to the storm reserve to cover future storm costs.  This is included as part of the “regulatory liability – storm” on the balance sheet.

Hurricane Wilma hit South Florida in October 2005 and impacted the Company’s natural gas segment. The storm costs will be charged to the natural gas “regulatory liability – storm” and are not expected to exceed the current reserve amount of $118,000. The electric segment has $1.5 million in storm reserves.

9.

Note Receivable- Water Division

In 2003, the Company sold certain assets comprising its water utility system. As part of the sale, the Company received an agreement from the purchaser to pay approximately $7.4 million in variable annual installments until February 15, 2010.  The present value of the remaining balance of the long-term receivable is $5.7 million, using a discount rate of 4.34% at September 30, 2005.  

10.

Goodwill and Other Intangible Assets

In accordance with SFAS No. 142, "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 a segment is impaired, the Company would write down the associated goodwill and intangible assets to fair value. The impairment test performed in 2005 showed no impairment for either reporting segment.

Goodwill associated with the Company’s acquisitions has been identified as a separate line item on the balance sheet and consists of $500,000 in the natural gas segment and $1.9 million in the propane gas segment.

Intangible assets associated with the Company’s acquisitions and software has been identified as a separate line item on the balance sheet.  Summaries of those intangible assets at September 30, 2005, are as follows:

11.

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 $448,000 for the nine months ended September 30, 2005.

12.

Stock Dividend

On July 25, 2005 a three-for-two stock split in the form of a stock dividend was issued to the shareholders of record on July 15, 2005.   All common share information has been restated to reflect the stock split for all periods presented.

13.

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 estimated that it will have over earnings in 2005 for regulated natural gas operations of $518,000. This liability has been included in accruals and payables on the Company’s balance sheet. The calculations supporting these liabilities are complex and involve a variety of projections and estimates before the ultimate settlement of such obligations. It is reasonably possible that the Company’s estimates of its earnings obligations could change in the last quarter of 2005 and the amount of the change could be material.

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.  Recently, the FPSC ordered 2002 natural gas over earnings of approximately $118,000 to be added to our “regulatory liability - storm” reserve to cover future storm costs. Finalization of the disposition and determination of the amount of 2005 natural gas over earnings is expected in 2006.