Caribbean Utilities Company blamed colder weather, additional temporary generation costs and higher consumer services expenses for a decline in earnings in the last quarter of 2014.
CUC’s fourth quarter net earnings were down $400,000 to $5.4 million year-on-year.
Kilowatt-hour sales dropped 3 percent due the weather, CUC said. The decline was partially offset by lower maintenance costs.
However, CUC customers should see a reduction in their electricity bills in 2015 as a result of lower fuel prices, the company said, adding that CUC passes through 100 percent of fuel costs to consumers on a two-month lag basis without markup.
In the fourth quarter, the company’s average price per imperial gallon of fuel decreased to $4.17 from $4.70 one year earlier. The average fuel cost charge rate per kWh charged to consumers for the fourth quarter 2014 was $0.28, a 3 percent decrease compared to the $0.29 per kWh for the fourth quarter 2013. Additional reductions to the fuel cost charge rate per kWh are expected from the 33 percent decrease in customs duties levied on diesel fuel imports, which came into effect on Jan. 1, 2015.
For the full year 2014, net earnings increased by $400,000 to $20.8 million on the back of a 2 percent kWh sales growth, lower depreciation and maintenance expenses and higher other income.
President and CEO Richard Hew said, “In spite of the decrease in earnings and kilowatt hour sales, the fourth quarter 2014 recorded overall positive results for the company.
“The announcement of CUC’s winning of the bid for firm generation, as well as progress being made by one of the renewable energy providers to develop a 5 megawatts solar power plant, are highlights of the period under review,” he added.
During the fourth quarter 2014, the Electricity Regulatory Authority announced that CUC was the successful bidder for new generation capacity. As a result, CUC will develop and operate a new 39.7 megawatts diesel power plant, including two 18.5 MW diesel generating units and a 2.7 MW waste heat recovery steam turbine. The project cost is estimated at $85 million and the plant will be commissioned no later than June 2016, CUC said.
CUC will see significant activity related to the development of the new diesel power plant over the next year, Mr. Hew said.
“Upon completion, the plant will boast the most fuel efficient generation ever installed by CUC, which will bring increased reliability and lower cost to our consumers.”
In terms of renewable energy generation, International Electric Power received planning permission to the start the development of a 5MW solar power plant. A draft power purchase agreement between CUC and International Electric Power has been submitted to the electricity regulatory for review.
In November 2014, the ERA issued a new generation license to CUC which will expire in November 2039. It replaces a license issued in 2008 but the terms are not materially different.
The ERA also approved CUC’s new customer service code which sees an increase in various customer service fees and the application of a finance charge for customer accounts that are overdue more than 60 days. This charge took effect on Jan. 1, 2015.