For the first time, the Caribbean Utilities Company has listed renewable energy in its public financial statements, accounting for nearly $350,000 in September.
At the same time, the company said in its third-quarter report, it had experienced record peak demand of 105.6 megawatts in late August. Previous peak loading was July 2016’s 103.4 MW.
The utility reported third-quarter earnings were up $300,000 compared to 2016, but said overall earnings in the first nine months of 2017 had declined by $1.5 million, to $18.3 million.
The 51-page report, dated Sept. 30, for the first time includes earnings from renewables, pegged at $349,000, described as a “100 percent increase” from the third quarter of 2016. Elsewhere, however, those earnings are entirely offset by $349,000 costs of supplying the energy to consumers.
“The renewables revenues,” according to a CUC spokesman, “represent the income earned from customers on generation provided by renewable energy.
“The costs of the renewables generation are passed onto customers with no markup on a two-month lag basis,” the spokesman said, describing them as similar to CUC’s “fuel factor” – customer charges covering 100 percent of the cost of oil and 30 cents per gallon in customs duties.
No oil is used in solar generation, nor are import duties applicable. However, the report says, “renewables costs are a combination of charges from the CORE program and Entropy Cayman Solar Limited.”
CORE is CUC’s Consumer Owned Renewable Energy program in which individuals and businesses install private – often rooftop-mounted – solar arrays, connected to CUC’s transmission and distribution grid. Each of the program’s 244 subscribers sells their electricity to CUC, then buys it back at discounted rates as required.
Almost half the subscribers are large commercial consumers. Another 249 CORE applicants await connection. CUC pays CORE subscribers $2.1 million annually – subsidized by non-CORE customers. As of the end of September, CUC had 29,017 customers, nearly 4,300 of them commercial.
CORE subsidies have long been a concern for both the company and its regulators. Earlier, a CUC spokesperson said the company was seeking to “minimize” the payments: “Without limiting the amount of CORE purchases,” he said, that sum “would become inequitable for this group to bear.”
Entropy Cayman Solar Ltd. is the local subsidiary of North Carolina-based Entropy Investment Management, which on June 20 opened Bodden Town’s 22-acre, 5 MW “utility-scale” solar farm.
Entropy’s 20-year contract mandates CUC payments to the solar operator of 17 cents for each kilowatt hour in the first year, incrementally increasing.
The third-quarter report, released last week, does not detail how many kWhs CORE and Entropy each generated during the previous 90 days or what CUC paid to each, but says costs for both renewable programs matched earnings.
“Renewables costs for [both] the three and nine months ended Sept. 30, 2017, totaled $0.3 million,” the document said.
“Revenues,” the spokesman said, “are fairly evenly split between Entropy and CORE, but this will vary monthly.”
In a caveat, the report said the initial numbers only represent September 2017, “when the company started recording renewables revenues as a separate item on customers’ bills.”
The match of earnings and expenditures, however, is a careful nod to laws governing CUC operations, prohibiting the company from earning profits on renewable energy.
The company declined to address directly questions of viability in the face of the prohibition, saying, “In the case of CORE and the Entropy contract, CUC only facilitates the pass-through of costs to consumers.”
The spokesman added that “CUC is committed to supporting the growth of renewable energy. It is a part of the company’s strategic goals.”
Those goals are expected to be clarified before the end of the year in the company’s Integrated Resource Plan, compiled by Virginia-based Pace Global.
An August 2016 press release said the study would take approximately 18 weeks to be completed. It was slated to analyze “all energy resources that are viable,” survey “costs, reliability, environmental impact and other aspects,” and recommend “a portfolio of energy resources for the market to give shape to the energy-generation plans for Grand Cayman over the next 30 years.”