Caribbean Utilities Company’s net earnings saw a 34% increase during the third quarter of 2023, compared to the three months from July to September 2022, according to its latest financial report.
The net earnings for the power company for the three months ended 30 Sept. were US$13.9 million, a US$3.5 million, or 34%, increase compared to the same period in 2022.
CUC, in its financial report, said the increase was a result of a 10% rise in kilowatt-hour sales driven by a 2% growth in customers and rising consumption amongst residential consumers.
Richard Hew, CEO and president of CUC, said in a statement accompanying the financial report, “A growing economy and record high temperatures drove a significant increase in consumer demand for electricity; the Company continues to meet this demand safely and reliably.”
The average monthly temperature this summer hit a historic high of 87.4 degrees Fahrenheit, compared to the previous average high of 85.4 degrees in the second quarter of 2022, the company noted – which would have driven up air conditioner use.
According to the latest report, CUC had a total of 33,503 customers by the end of September, an increase of 638 customers.
The company hit a new record peak load of 124 megawatts in July this year.
Revenue from electricity sales increased by US$4.2 million for Q3 2023 to US$32.1 million, compared to Q3 2022. The CUC report noted that this increase was mostly driven by the increase in kWh sales and the base rate increases of 5.4% and 3.7% on 1 Jan. and 1 June, respectively.
Fuel factor
The company had faced numerous complaints from customers in Cayman this summer, who questioned why their bills seemed to be far higher than usual. Fuel cost charges amounted to more than half of most bills.
Concerns over rising power bills, which some residents said they were struggling to pay, led to West Bay West MP McKeeva Bush bringing a private member’s motion to Parliament asking for CUC’s billing practices to be investigated.
In its latest financial report, CUC addressed the issue of fuel charges, saying those are passed directly on to customers, on a two-month time lag, with no mark-up for the company.
“Fuel factor decreased by $9.8 million or 20% for Q3 2023 compared to Q3 2022,” CUC noted. “This is driven by the decrease in the average Fuel Cost Charge Rate, partially offset by the increase in kWh sales. The average rate charged to consumers for Q3 2023 was $0.21 per kWh, compared to $0.29 per kWh for Q2 2022.”
It added that the company’s average price per imperial gallon of fuel for the third quarter of 2023 decreased by 28% to US$3.80, in comparison to US$5.27 for Q3 2022.
The company stated that the fuel cost constituted about 54% of each customer’s bill for Q3 2023, compared to 63% in the third quarter of 2022.
It noted that following the significant increase in fuel prices in 2022, a downward trend was seen during the first half of 2023. However, during Q3 2023, the average fuel price started to trend upward, due to global economic conditions and demand for oil and gas.
Future projects
Hew said CUC was progressing with a number of major projects, including a battery energy storage system and natural gas conversion which, he said, “will lower our carbon emissions and stabilize energy costs for our customers”.
He added, “We look forward to participating in any utility-scale renewable energy bid conducted by the Utility Regulation and Competition Office (OFREG) which we believe will bring energy cost reductions for consumers.”
The report noted that in September this year, CUC had sought qualification submissions from prospective natural gas suppliers.
“In line with the Cayman Islands National Energy Policy and the Company’s Integrated Resource Plan, CUC is committed to increase the use of cleaner energy and reduce greenhouse gas emissions over the long term,” the company stated.
It added, “In 2022, the Company initiated an infrastructure project for dual-fuel conversion of five generating units totalling 68MW of capacity. This Life Cycle Upgrade project aims to reliably meet base load and capacity needs while the Company continues its focus on integrating additional utility-scale renewable energy projects.”
In September last year, it signed an agreement with technology group Wärtsilä for the supply of two 10-megawatt Battery Energy Storage System, or ‘BESS’. The company says this project, which will be its first energy storage facility, will allow for increased renewable energy capacity on Grand Cayman, and that it is anticipated to “lower fuel costs and improve fuel efficiency by up to 5% to 6%” and lead to a proportionate reduction of CO2 emissions.
The 20-megawatt BESS is expected to be commissioned during the first half of 2024 at the Hydesville and Prospect substations.
Read the full Q3 financial report here.
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CUC is making excessive profits whilst many of their customers are struggling to pay their bills, time for Govt to step in and end their sweetheart deal.