CUC fourth quarter earnings climb on higher sales

CUC President and CEO Richard Hew
CUC President and CEO Richard Hew

Caribbean Utilities Company reported earnings of $6.2 million in the fourth quarter of 2015, a $0.8 million increase year on year, due to an 8 percent growth in kilowatt-hour sales and lower finance charges during the period.

The results were partially offset by higher costs for consumer services, maintenance and administration.

Net earnings for the full year 2015 grew by $2 million to $22.8 million based on a 3 percent sales growth in kilowatt-hours, higher base rates, lower financing charges and higher other income. With the decline of oil prices in 2015, customers saw a significant reduction in the fuel cost charge per kWh in their electricity bills, CUC said.

The average fuel cost charge rate per kWh charged to consumers in the fourth quarter 2015 was 39 percent lower than during the same period a year earlier.

The average fuel cost charge for the full year 2015 was $0.19 per kWh, down from an average of $0.27 per kWh in 2014.

CUC said this resulted in savings of $46.6 million for its customers last year.

A reduction in customs duties on fuel imports, which took effect on Jan. 1, 2016, will lead to a further decrease of the fuel cost charge in the first quarter, the electricity provider noted.

CUC’s sales were positively impacted by warmer weather conditions which affected the use of air conditioning. The average monthly temperature for the last quarter of 2015 was 83.0 degrees, 3.6 degrees Fahrenheit higher than in 2014. For the year, the average temperature of 83 degrees Fahrenheit was 1 degree higher compared to the previous year.

In addition to the weather, annual sales were supported by large commercial development and 2 percent higher customer numbers.

The total number of CUC customers increased by 420 to 28,204.

CUC President and CEO Richard Hew said, “The fourth quarter and the financial year 2015 were positive in terms of sales and earnings growth. We are also pleased that during the year our customers received a significant reduction in their per kWh electricity costs, benefitting from the full pass through of lower fuel purchase costs.”

He added that CUC continues to operate successfully in a low-growth environment and continues to adopt renewable energy as a sustainable technology path for the future.

During the final quarter of last year, the Electricity Regulatory Authority approved a power purchase agreement proposed by CUC for a 5 megawatt plant to be built by Entropy Cayman Solar Limited in the district of Bodden Town.

This solar project, scheduled for completion in October 2016, will provide energy to power approximately 800 homes with clean, renewable solar energy and will significantly reduce emissions into the atmosphere through the avoidance of diesel fuel consumption, CUC said.

The Consumer-Owned Renewable Energy generation program which was proposed by CUC and started in 2011 has proven popular with residential and commercial customers who are able to connect their solar panels or wind turbines to the CUC grid. The program has attracted 226 participants and is nearing its current capacity of 4 MW.

CUC and the ERA are currently reviewing the program to determine if there should be additional capacity. It is anticipated that an announcement on the terms for further extension of the CORE program will be made by March 1, 2016.