CARIBBEAN UTILITIES COMPANY, LTD. CLASS A ORDINARY SHARES ARE LISTED FOR TRADING IN UNITED STATES FUNDS ON THE TORONTO STOCK EXCHANGE.
GRAND CAYMAN, CAYMAN ISLANDS, Aug. 18, 2020 /CNW/ - Caribbean Utilities Company, Ltd. (TSX: CUP.U) ("CUC" or "the Company") announced that in accordance with the Rate Cap Adjustment Mechanism ("RCAM") contained in the Company's Transmission & Distribution ("T&D") Licence issued by the Cayman Islands Government in April 2008, CUC was allowed to increase its base rates by 6.6% effective June 1, 2020. However, due to the COVID-19 pandemic, the Company and the Cayman Islands Utility Regulation and Competition Office ("OfReg") have agreed to defer the rate increase and recovery of related lost revenues until January 2021.
As a result, customers will continue to see low electricity rates through 2020 and only a marginal increase in the energy charge component of their bills for January 2021 electricity consumption billed in early February 2021. With their July billings (distributed in early August), customers would have experienced a 37% reduction in the Fuel Cost Charge since the beginning of the year which represents a $48.60 or 20% monthly bill reduction on the average residential consumption of 1,000 kiloWatt hours(kWh).
As per Condition 25 of the T&D Licence, the RCAM is based on a formula, which incorporates readily available external data to determine a relevant Inflation Factor or Price Level Index. This consists of a weighted average of 60% of the change in the Cayman Islands Consumer Price Index ("CI CPI") and 40% of the change in the United States of America Consumer Price Index ("US CPI"), (with both indices adjusted to remove the effects of prices of food and fuel) as reported by independent authorities for the 2019 calendar year.
The Cayman Islands COVID-19 shelter-in-place order had, and continues to have, a significant impact on the Grand Cayman economy and the related decrease in energy demand has affected CUC's financial performance as reflected in the recently released financial results for the three months ended June 30, 2020 ("Second Quarter 2020" or "Q2 2020").
Electricity sales for Q2 2020 were 4% lower than sales for the same period in 2019. CUC's Q2 2020 earnings were also 43% or $3.4 million lower when compared to same period in 2019.For the six months ended June 30, 2020, CUC invested US$30 million in capital expenditures in order to ensure reliability of the grid.
President and CEO of CUC, Mr. Richard Hew, stated that, "We are pleased to reach an agreement with OfReg to defer the customer rate increase until 2021. CUC is well aware that, if effected in accordance with our Licences, an increase of base rates in June may have been difficult for many of our customers to bear, and therefore the Company made the submission to OfReg to delay the implementation date. CUC's ability to absorb lost revenues while facing increasing costs speaks to the financial stability of the Company at the outset of this pandemic. The ability to recover revenues in the future is necessary to maintain that financial stability and to meet the Company's ongoing obligations to invest in infrastructure and provide a safe, reliable and sustainable electricity service."
CUC will continue to assist customers with reducing their bills through energy conservation and by offering extended payment plan options to those in need until the end of next month.
For more information about the terms of the CUC T&D Licence, the Rate Cap Adjustment Mechanism, the Energy Smart programme or the Cayman Islands Utility Regulation and Competition Office (OfReg), please visit the CUC or the OfReg websites at www.cuc-cayman.com or www.ofreg.ky
CUC provides electricity to Grand Cayman, Cayman Islands, under a non-exclusive Electricity Generation Licence expiring in 2039 and an exclusive Electricity Transmission and Distribution Licence expiring in 2028. Further information is available at www.cuc-cayman.com.
Caribbean Utilities Company, Ltd. ("CUC" or "the Company"), on occasion, includes forward-looking statements in its media releases, Canadian securities regulatory authorities filings, shareholder reports and other communications. 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 certain risks and uncertainties surrounding future expectations generally that may cause actual results to vary from plans, targets and estimates. Such risks and uncertainties include but are not limited to operational, general economic, market and business conditions, regulatory developments and weather conditions. 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.
For further information: Letitia Lawrence, VP of Finance, Corporate Services & CFO, Phone: (345) 949-5200, Fax: (345) 949-4621