CUC: more power needed by 2009

Caribbean Utilities Company anticipates needing more generating capacity by summer 2009.

The company’s 2007 Annual Report forecasts electricity sales to increase eight per cent over the next years alone as a result of additional customers. In total, CUC expects to add 1,800 new customers to the 22,768 it had through April 2007.

CUC President and CEO Richard Hew said the global lead time for obtaining new generation is between 12 and 24 months.

‘If we do not install generation to meet the load growth, we reduce our reserve margin and run a risk of experiencing frequent and prolonged power outages when units come off line for planned or emergency maintenance or repairs,’ he said.

Mr. Hew said a 16 Megawatt generator is the smallest unit practical and economical for Grand Cayman.

It is unknown whether CUC will be allowed by government to order the additional generating capacity, or if the needed additional power will come from another source instead.

Although CUC has budgeted US$12.2 million in capital generation expenditures for the current fiscal year, Mr. Hew said the amount relates primarily to the remaining payment on the recently completed generation expansion project.

And while CUC projects to spend US$171 million in capital expenditures over the next five years, Mr. Hew said most of that relates to transmission and distribution.

‘We have a few substations to build and the Eastern transmission loop to complete by the end of 2008.’

The current licence renewal negotiations – which have been going on for close to two years now – between CUC and the government could impact the power company’s ability to purchase new generating capacity.

CUC has an exclusive electricity licence through 2011. However, the government has expressed the desire to renew the licence only on a non-exclusive basis to allow for competition in the industry.

Opposition MLA Cline Glidden, who was involved with CUC’s licence negotiations before the change in government in May 2005, believes if CUC orders new generating capacity, it will hinder any new entrants from entering the electricity market on Grand Cayman.

In addition, he pointed out that the government has stated its planned waste-to-energy facility at the George Town Landfill will produce six to eight MW of electricity when completed. Minister of Infrastructure Arden McLean recently told the Legislative Assembly that government hopes the waste-to-energy facility is up and running by 2010.

‘If you look at what government has said they are moving forward on, how can CUC be talking about adding generation?’ Mr. Glidden asked. ‘If you allow CUC to keep buying generation, you’re eliminating the possibility of the waste-to-energy facility being feasible.

‘Their [Annual] Report does not seem to go hand-in-hand with what the government has planned.’

But electricity demand could rise considerably more by 2010 because of all the construction projects currently under construction or planned.

In its Annual Report, CUC pointed to large commercial projects like Camana Bay, the new Bank of Butterfield building and Governors Square, plus residential developments like the Caribbean Club, as some of the basis of expected growth.

In addition to those projects, by 2010 the Government will build its new office accommodation project and four more schools; Camana Bay will expand its commercial Town Centre and begin its residential development; and the Ritz-Carlton resort project will continue to expand.

Three other planned large projects – the Residences at Beach Bay, the Island Resort and Residences in East End and the Mandarin Oriental Hotel along the Queen’s Highway – will also increase demand when completed, as will a number of other residential developments.

In the meantime, the government’s licence negotiations with CUC have passed another deadline set by Minister McLean for the end of August

Around the same time, CUC hit a new peak demand record of 92 MW, up 5.2 MW, or six per cent, over the 2006 peak.

However, CUC’s two significant power outages last week were related to transmission and distribution equipment failures, not generating capacity.

CUC is undergoing a major T&D maintenance programme over the current fiscal year, something it does every five years, Mr. Hew said.

‘We have already seen improvements in reliability… as a result of the T&D maintenance and the 2007 generation expansion,’ he said.