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(CNS Business): Record breaking rain, high fuel prices and a weak economy were behind the poor performance of Grand Cayman’s monopoly power provider, the firm’s boss said Wednesday. Despite an increase in customers, CUC profits fell by 14% and without a serious economic recovery there will be no real improvement in its financial performance, the firm believes. Net earnings for the three months ending 30 June totalled $5.1 million, a decrease of $0.8 million when compared to $5.9 million for the second quarter last year. A 3% decline in kilowatt-hour sales, higher depreciation costs and finance charges were partially offset by cuts in administration, service and maintenance costs, CUC said.
Although customer numbers grew, sales fell to 139.9 million kWh, a decrease of 5.0 million kWh compared to last year. After the adjustment for dividends on the preference shares of the company, earnings on Class A Ordinary Shares for the Second Quarter 2012 were $5.0 million, or $0.18 per Class A Ordinary Share, a decrease of $0.8 million from the $5.8 million, or $0.20 per Class A Ordinary Share for the Second Quarter 2011, the company said in its financial report.
“With a continuing weak economy, relatively high fuel prices and wetter than normal months, electricity sales and earnings for the quarter under review were negatively impacted,” said president and CEO, Richard Hew.
The average monthly rainfall for the period was 9.3 inches, compared to an average of 4.2 inches for the same period last year, and May 2012 saw a record breaking 17.7 inches of rainfall, the highest level on record in one month in over 9 years and the highest level on record for the month of May in 20 years. The exceptionally rainy weather resulted in reduced customer air-conditioning load.
“We continue to focus on controlling costs while meeting our obligations to provide a safe and reliable electricity service to our customers. A stronger economy with real economic growth is required to provide any material improvement in financial performance,” Hew added.
CUC also reported that it was installing the Advanced Metering Infrastructure (AMI) system during this quarter. “Over five thousand new AMI meters have been installed which allows CUC to measure, collect and analyse energy usage, and communicate with the meters, either on request or on a schedule from its central office,” it said. “Customers will be able to use the information provided by the AMI system to become more energy efficient.”
Hew said that the technology was expected to bring significant benefits to CUC in terms of efficiency in operation as well as the enhanced service to electricity consumers.
During the period under review CUC also commenced discussions with two renewable energy developers who were selected through a competitive bid process to provide renewable energy to CUC’s grid under power purchase agreements. The proposals being considered are two 5 megawatts solar photovoltaic power plants and one 3 MW small scale wind turbine project.
In March 2012 the Electricity Regulatory Authority (ERA) solicited request for proposals for additional generation capacity from six qualified bidders (including CUC). CUC submitted its bid on 16 July. This competitive solicitation process is in response to the Certificate of Need issued by CUC in November 2011, driven primarily by the upcoming retirements of some of the company’s generating units. The ERA’s selection of the successful bidder is expected by mid-September to meet the projected commissioning date of July 2014.
The comments posted do not necessarily reflect the views of CNS or any individual staff member. All comments are posted subject to approval by CNS. Read more
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