CUC releases third quarter results

Electricity sales for Caribbean Utilities Company showed an increase in net earnings of 22 per cent, or US$1.2 million, in its third quarter 2009 results.

The power company’s net earnings for that period were US$6.6 million.

However, CUC’s net earnings for the first nine months of the years totalled US$14.1 million – down 7 per cent or US$1 million compared to the same period in 2008.

President and CEO of CUC Richard Hew said, ‘We expect to see weak or no growth in sales through 2009 and into 2010. The company has reduced capital and other expenditures to mitigate the impact of flat sales on future financial results.’

According to the company, its three-month earnings were positively affected by higher sales compared to 2008 and a rate increase of 2.4 per cent introduced in June this year.

In a statement on the results, CUC said that during the nine month period ended September 30, 2009, earnings were adversely affected by a contraction in sales due to cooler and wetter than usual weather during the first six months of 2009 and by slowed economic growth on the island.

The company sold 153.3 million kiloWatt hours of electricity in the three months ending September 30, 2009, compared to 145.8 million kWh for the three months ended October 31, 2008; an increase of 5 per cent. For the nine months ended September 30, 2009, electricity sales declined by 2 per cent to 415.6 kWh, compared to 423.6 kWh for the nine months ended October 31, 2008.

CUC announced last year it was changing its financial year end from April 30 to December 31, so is comparing figures with the nearest, previously reported period in 2008.

The company said that while electricity sales were adversely affected by the wetter and cooler than average weather throughout the first half of 2009, they were positively affected by higher temperatures in July and August when a new peak load of 97.5 megawatts was recorded.

Also affecting the sales variance is the comparison of two differing periods.

The company advised the Cayman Islands Electricity Regulatory Authority in September that, based on revised lower growth forecasts, there was no longer a need to proceed with the previously announced bid for 32 MW of generation capacity; 16 MW in 2012 and an additional 16 MW in 2013. The ERA has since cancelled the solicitation and will commence a new solicitation when growth rebounds and CUC’s demand forecast confirms the need for additional capacity.

Following the announcement of the solicitation cancellation, CUC submitted a revised Capital Investment Plan to the ERA forecasting expenditures of $157 million for the 2010 to 2014 period. The ERA approved the company’s 2009 CIP of $47.7 million.

CUC says the revised five-year CIP is in line with lower growth forecasts.

During the third quarter of 2009, the company closed the second tranche, in the amount of $10 million, of a private placement of 7.5 per cent Senior Unsecured Notes in the total amount of $40 million.

‘With the availability of this capital and the delay of additional generation capacity, the company is positioned to weather the current economic circumstances,’ Mr. Hew said.

He added: ‘While the slowed economy on the island presents challenges to our business, we remain confident that we will be able to meet those challenges and preserve shareholder value.’

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