Caribbean Utilities Company reported a 2-percent increase in total customers, a 3-percent increase in electricity sales, but also an $1.8-million decline in net earnings for the first quarter of 2018 compared to the same period a year earlier.
At the end of March, CUC had a total of 29,273 customers, an annual increase of 509.
In addition to the 2-percent growth in residential customers, sales were positively impacted by a 4-percent higher average consumption.
Sales for the first quarter totaled 140.4 million kilowatt hours, an increase of 3.8 million kWh over the first quarter in 2017.
However, sales from large commercial customers declined due to the newly introduced demand billing rate, CUC said.
Sales revenues for large commercial customers under the new demand rate were lower than they would have been under the previous energy-only rate. CUC estimates the shortfall is about $600,000 or $0.02 per Class A Ordinary Share.
The introduction of the demand rates for large commercial customers, over a three-year period, was intended to be revenue neutral. Because early indications show that they are not, the electricity provider said it had written to the Utility Regulation and Competition Office to request a recovery of the shortfall and an adjustment in the rate going forward.
“Grand Cayman’s economy continues to grow and with the exception of the decline in revenues due to the newly introduced demand billing rate, the first quarter 2018 was consistent with plan,” said CUC President and CEO Richard Hew. “The demand rate is intended to be revenue neutral and the shortfall is expected to be recovered in the future.”
The lower-than-expected revenue from large customers was partially responsible the $1.8 million year-on-year decline in CUC’s net earnings to $2.7 million in the first quarter 2018.
Other factors were higher-than-planned transmission and distribution and maintenance costs, increases in depreciation driven by the company capital investment plan, and a $100,000 increase in finance charges.
CUC has a five–year, $219-million capital investment plan to increase the reliability of the electricity system and to meet the demands of the growing economy.
“Capital expenditures during first quarter 2018 totaled $8.3 million and included distribution system extension and upgrades, generation replacement costs and LED street lighting replacement,” Mr. Hew said.
Meanwhile, renewable energy on the grid grew by 250 percent compared to last year, to 3.5 million kilowatts. CUC has the goal of reaching 25-percent renewable energy on the grid by 2025.
After the adjustment for dividends on the preference shares of the company, earnings on Class A Ordinary Shares for the first quarter 2018 were $2.6 million, or $0.08 per Class A Ordinary Share, compared with $4.3 million or $0.13 per Class A Ordinary Share during the same period last year.