CUC third quarter profit up despite economy, weather

Caribbean Utilities Company’s net earnings for the third quarter 2012 totalled US$6.6 million, an increase of $0.3 million, or 5 per cent, when compared to $6.3 million for the three months ended 30 September, 2011. Lower finance charges and an increase in other income were partially offset by a 1 per cent decline in kilowatt–hour sales and higher depreciation costs for the Third Quarter 2012 when compared to the third quarter 2011.

“Electricity sales for this quarter and earnings year to date were negatively impacted by the continuing weak economy, relatively high fuel prices and wetter than normal months,” said President and CEO Richard Hew. “However, despite these circumstances, the company continues to meet its obligations of providing a safe, reliable and efficient service to the residents of Grand Cayman while providing a reasonable return to shareholders through prudent management of its resources.”

After the adjustment for dividends on the preference shares of the company, earnings on Class A ordinary shares for the third quarter 2012 were $6.5 million, an increase of $0.4 million, or 7 per cent year on year.

Net earnings for the nine months ended 30 September, 2012 decreased by 11 per cent to $13.6 million from $15.3 million for the same period in 2011. Earnings per class A ordinary share for the first nine months of 2012 were $0.46, down from $0.53 for the same period last year. This decline was driven by higher depreciation costs and a 1 per cent decline in kWh sales.

The company’s reliability as measured by the Average System Availability Index, the percentage of time power is available to customers, was 99.95 per cent for the third quarter 2012.

Upgrades

Capital expenditures for the nine months ended 30 September, 2012, totalled $21.6 million including $8.5 million for distribution system upgrades, $4.1 million for generation asset upgrades and $2.5 million for the company’s advanced metering infrastructure system.

The installation of the new AMI system continued over the quarter under review. More than 7,400 new meters have already been installed. The AMI system allows CUC to measure, collect and analyse energy usage more effectively, to communicate directly with metering services such as electricity meters, either on request or on a schedule, and to shorten the delivery time for various customer services, CUC said. The AMI project is expected to be completed in the first quarter of 2014.

Additional capacity tender

Earlier this year, the Electricity Regulatory Authority solicited Request for Proposals for additional generation capacity from six qualified bidders including CUC. CUC submitted its bid on 16 July, 2012. This competitive solicitation process comes in response to the certificate of need issued by CUC in November 2011, driven primarily by the upcoming retirements of some of the company’s generating units.

The projected date for 18 MW of additional generation capacity is July 2014, with a second increment of 18 MW of capacity required up to three years later in 2017 with timing dependent on economic growth and development of the Grand Cayman economy and the related growth in demand for electricity. The ERA’s selection of the successful bidder is expected before the end of 2012 to meet the projected commissioning date of July 2014.

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