Border closures and coronavirus-related lockdown measures have caused a decline in Caribbean Utilities Company’s full-year electricity sales and earnings.
The electricity provider’s operating income for 2020 fell by $0.6 million to $28.9 million. Net earnings of $26.1 million were $3 million lower than in 2019.
These results were partially offset by base rate increases of 0.9% and 6.6%, effective from 1 June 2019 and 1 June 2020, respectively, CUC said in a press release.
After the adjustment for dividends on the preference shares of the company, earnings on Class A Ordinary Shares for fiscal 2020 were $25.1 million, or $0.74 per Class A Ordinary Share, compared to $28.1 million, or $0.84 per Class A Ordinary Share in 2019.
The decline in net income was mainly due to 3.5% lower electricity sales last year. Particularly, hotel closures prompted by the halt to tourism contributed to the drop in electricity sold to large commercial customers.
Although the residential kilowatt-hour consumption increased by 2%, CUC only sold 644.3 million kWh during 2020, about 23.4 million kWh less than in the previous year.
The number of CUC customers last year increased by 756 to 31,293.
CUC president and CEO, Richard Hew, said in the press release that the Cayman Islands effectively managed to avoid the health crisis that the COVID-19 pandemic brought to other jurisdictions in 2020, and that, apart from the tourism industry, the economy proved very resilient.
“The impact to CUC was mainly through the reduction in electricity sales to large office buildings and hotels as well as the thousands of tourism workers who departed Grand Cayman. Company operations were also impacted by the curtailment of travel by overseas specialists required to conduct critical maintenance and repairs,” he said.
“Despite these setbacks, the company improved its customer satisfaction and reliability results over 2019, completed a Rights Offering to pay down debt, pared costs and capital expenditures to maintain financial stability and delivered reasonable earnings in the circumstances.”
In October 2020, CUC raised $47.8 million through the issue of 3,359,362 Class A Ordinary Shares.
The company’s capital expenditures, excluding construction costs, dropped to $53.4 million, 12% less than in 2019.
Last year, CUC completed the first phase of its technology centre and control room and progressed with the new Seven Mile Beach and Prospect substations which are expected to be commissioned in early 2021.
The tendering process for a 20-megawatt utility-scale battery project continued last year. The project was approved by utility regulator OfReg in 2019 but is not expected to come online before the end of this year or early 2022.
The battery storage would provide greater grid stability and is needed to integrate higher levels of intermittent renewables. At the end of 2020, CUC connected 587 customers with 7,735.66 kilowatts of renewable capacity.
At the same time, the company submitted a proposal for a utility-scale solar plus battery-storage project to the regulator.