By Lindsey Turnbull
Despite less usage of electricity by Cayman residents, the country’s electricity provider, Caribbean Utilities Company, have just announced an increase in profits for the quarter ending 30th September 2018 over the same period last year, and also a profit for the year up to 30th September, when compared to the same time frame last year.
CUC’s unaudited results for the third quarter ending 30 September showed that net earnings totaled US$9.2 million. That marks an increase of US$1.5 million when compared to net earnings of US$7.7 million for the three months ending 30 September, 2017. Net earnings for the full nine months ending 30 September, 2018 totaled US$18.9 million, which is an increase of US$0.6 million when compared to net earnings of US$18.3 million for the same time frame last year.
The company stated that the increase in net earnings was due to higher electricity sales revenues and other income, and lower general and administration expenses. These items were partially offset by higher depreciation and transmission and distribution costs, they said.
After the adjustment for dividends on CUC’s preference shares, shareholders could expect modest earnings on Class A Ordinary Shares for the third quarter 2018, totaling US$9.1 million, or US$0.27 per Class A Ordinary Share. This was up from US$7.6 million or US$0.23 per Class A Ordinary Share for the third quarter 2017. After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the nine months ending 30 September, 2018 were US$18.6 million, or US$0.56 per Class A Ordinary Share, compared to last year’s earnings of US$18.0 million or US$0.55 per Class A Ordinary Share.
CUC said that sales were down for the third quarter 2018, with 170.9 million kWh of electricity sold, a decrease of 2.8 million kWh in comparison to 173.7 million kWh for the third quarter 2017. Sales for the entire nine months were also down at 471.0 million kWh, a decrease of 0.3 million kWh in comparison to 471.3 million kWh last year. They blamed the drop in sales partly on a 4 per cent decrease in average residential consumption, as well as a decrease in the number of large commercial customers when compared to the same period last year. Even with the drop in demand, CUC said the number of total customers had grown. As at 30 September, 2018 there were 29,584 customers, an increase of 567 customers, or 2 per cent, compared to last year.
Wetter and cooler weather was partly to blame, causing less demand for air conditioning and fans and therefore electricity. The average monthly temperature for the nine months ending 30 September, 2018 was 82.5F as compared to 83F degrees for the nine months ended 30 September, 2017. Customers were managing their energy usage more efficiently which had caused a reduction in sales. Fuel prices had also increased, negatively impacting sales, CUC said, with a gallon of fuel in the third quarter 2018 increasing 27 per cent to US$3.13, compared to costing US$2.46 in the same period last year.
New projects on the horizon
CUC detailed some new projects that would help improve service reliability and meet customer growth, including the breaking ground for a Seven Mile Beach substation, which is costing CUC US$16.7 million and will be CUC’s first substation to incorporate medium voltage, gas insulated switchgear technology, the first of its kind in this region. Following this project, they will build a similar substation to serve the Prospect area with ground breaking anticipated in the fourth quarter of this year.
CUC said they were also waiting for the approval from the regulator of their Integrated Resource Plan. This plan will help to instate “rapid but stable increase in grid integrated renewable energy sources which will deliver economic and environmental benefits”, they said.
CUC President and CEO, Richard Hew, said the third quarter 2018 kilowatt hour sales were lower than expected but they were able to manage costs and deliver an increase in earnings.
“We continue our investments in leading technology such as the new Seven Mile Beach substation which will serve our customers more reliably and efficiently for many years to come. Rising world fuel prices and the negative impact on cost to serve our customers remain a concern and the Company looks forward to a rapid diversification of the energy sources on the grid during the implementation phase of the Integrated Resource Plan,” he said.