CARIBBEAN UTILITIES COMPANY, LTD (CUC) ANNOUNCES UNAUDITED THIRD QUARTER RESULTS
The Caribbean Utilities Company, Ltd. is listed for trading in United States dollars on the Toronto Stock Exchange under the trading symbol "CUP.U".
GRAND CAYMAN, Cayman Islands, Oct. 27, 2023 /CNW/ - The Caribbean Utilities Company, Ltd. ("CUC or "the Company") announced its unaudited results for the three- and nine-months ending September 30, 2023 (all figures are in United States Dollars).
- Net earnings for the three months ended September 30, 2023 ("Third Quarter 2023" or "Q3 2023") were $13.9 million, a $3.5 million or 34% increase compared to the three months ended September 30, 2022 ("Third Quarter 2022" or "Q3 2022").
- 10% increase in kilowatt-hour ("kWh") sales in Q3 2023 compared to Q3 2022 driven by the 2% customer growth and increase in average customer consumption.
- New record peak load of 124 megawatts (MW) experienced in July 2023 with no disruption to service.
- Average monthly temperature for Q3 2023 hit a historic high of 87.2F compared to 85.4F in Q2 2022.
- Continued progress on the installation of battery energy storage systems expected to be commissioned during the first half of 2024.
- Request for qualifications sought for the supply of natural gas as an alternative fuel to generate firm capacity while the Company continues its focus on utility-scale renewable energy projects.
- Release of 2023 Sustainability Update Report – focus on the Company's progress on environmental, social and governance initiatives.
- Renewal of annual property insurance with no reported claims in the past 10 years.
- Collaborated with the Ministry of Sustainability and Climate Resiliency on a home energy efficiency programme (CHEER) for vulnerable persons on Grand Cayman.
"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. We continue progress with major projects such as the battery energy storage system and natural gas conversion which will lower our carbon emissions and stabilize energy costs for our customers. 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," said Mr. Richard Hew, President and Chief Executive Officer.
Net earnings for the Third Quarter 2023 were $13.9 million, a $3.5 million increase from $10.4 million for Third Quarter 2022. This increase is primarily attributable to increase in kWh sales partially offset by higher finance charges. After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for Q3 2023 were $13.8 million, or $0.36 per share, as compared to $10.3 million, or $0.28 per share for Q3 2022.
Sales in kWh for Q3 2023 were 203.2 million kWh which is an increase of 19.2 million kWh or 10% compared to Q3 2022. The increase in kWh sales is driven by a 2% growth in the overall customer numbers and the increase in the average consumption of residential customers. Total customers as of September 30, 2023, were 33,503, an increase of 638 customers.
Electricity sales revenues increased by $4.2 million for Q3 2023 to $32.1 million when compared to Q3 2022. The increase in electricity sales is primarily driven by both the increase in kWh sales and the base rate increases of 5.4% and 3.7% effective June 1, 2022 (deferred to January 1, 2023) and June 1, 2023, respectively.
Fuel factor and renewable revenues are a pass-through at cost to customers. Fuel factor decreased by $9.8 million or 20% for Q3 2023 compared to Q3 2022. 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. The Company's average price per imperial gallon of fuel for Third Quarter 2023 decreased by 28% to $3.80 in comparison to $5.27 for Third Quarter 2022. The fuel cost constitutes about 54% of the customer bill for Q3 2023.
The Company renewed its annual property insurance on July 1, 2023, despite the Caribbean region facing significant insurance premium hikes during the past year. No insurance claims have been made by the Company during the preceding 10 years. The Company continues its efforts to improve the resiliency of its infrastructure to mitigate any increased risk of property damage due to climate change. The Company was able to renew its insurance with no change in coverage from prior years and on favourable rate terms.
The Company continues its effort to reduce the cost of energy production and carbon emissions. As a part of the Company's Integrated Resource Plan and the Cayman Islands National Energy Policy, the Company sought qualification submissions from prospective natural gas suppliers as an alternative fuel to generate firm capacity. Continual progress is being made on the life cycle upgrade project for the dual-fuel conversion of five of its generating units, totaling 68 MW of capacity. This project aims to meet base load and capacity needs while the Company continues to pursue utility scale renewable energy projects.
In collaboration with local organization, Resilience Cayman, the Company assisted with the execution of the Ministry of Sustainability and Climate Resiliency to deliver the Cayman Home Energy Efficiency Retrofit (CHEER) programme. This programme provides energy-saving retrofits for lower-income households. CUC has provided home energy monitors and has conducted comprehensive energy audits on behalf of these households.
Capital expenditures for the nine months ending September 30, 2023, were $78.3 million, an increase of $12.5 million, or 13% compared to $65.8 million for the nine months ending September 30, 2022. These expenditures primarily relate to several projects highlighted below:
- Distribution system extension and upgrades,
- Generation replacements,
- Engine room 5 conversion to natural gas,
- Alternate energy technologies,
- Installation of utility scale battery storage (ongoing),
- Facility and auxiliary asset replacement costs, and other
- Resiliency projects
CUC's Third Quarter 2023 results and related Management's Discussion and Analysis ("MD&A") are attached to this release and incorporated by reference. The MD&A section of this report contains a discussion of CUC's unaudited Third Quarter results, the Cayman Islands economy, liquidity and capital resources, capital expenditures and the business risks facing the Company. The release and Third Quarter 2023 MD&A can be accessed at www.cuc-cayman.com (Investor Relations/Press Releases) and at www.sedarplus.ca.
The principal activity of the Company is to generate, transmit and distribute electricity in its licence area of Grand Cayman, Cayman Islands pursuant to a 20-year Transmission & Distribution ("T&D") Licence and a 25-year non-exclusive Generation Licence (the "Generation Licence" and together with the T&D licence, the "Licences") granted by the Cayman Islands Government (the "Government", "CIG"). The T&D Licence, which expires in April 2028, contains provisions for an automatic 20-year renewal and the Company has reasonable expectation of renewal until April 2048. The Generation Licence expires in November 2039. Further information is available at www.cuc-cayman.com.
Certain statements in the MD&A, other than statements of historical fact, are forward-looking statements concerning anticipated future events, results, circumstances, performance or expectations with respect to the Company and its operations, including its strategy and financial performance and condition. Forward looking statements include statements that are predictive in nature, depend upon future events or conditions, or include words such as "expects", "anticipates", "plan", "believes", "estimates", "intends", "targets", "projects", "forecasts", "schedule", or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could". Forward looking statements are based on underlying assumptions and management's beliefs, estimates and opinions, and are subject to inherent risks and uncertainties surrounding future expectations generally that may cause actual results to vary from plans, targets and estimates. Some of the important risks and uncertainties that could affect forward looking statements are described in the MD&A in the section labeled "Business Risks" and include but are not limited to operational, general economic, market and business conditions, regulatory developments and weather. CUC cautions readers that actual results may vary significantly from those expected should certain risks or uncertainties materialize, or should underlying assumptions prove incorrect. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.
SOURCE Caribbean Utilities Company, Ltd.
Letitia Lawrence, Vice President Finance and Chief Financial Officer, Phone: (345) 914-1124, E-Mail: [email protected]
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