Mr. Richard Hew reports

CARIBBEAN UTILITIES COMPANY, LTD (CUC) ANNOUNCES UNAUDITED THIRD QUARTER RESULTS

Caribbean Utilities Co. Ltd. has released its unaudited results for the three and nine months ending Sept. 30, 2023 (all figures are in United States dollars).

Highlights:

• Net earnings for the three months ended Sept. 30, 2023, were $13.9-million, a $3.5-million or 34-per-cent increase compared with the three months ended Sept. 30, 2022;
• 10-per-cent increase in kilowatt-hour (kWh) sales in Q3 2023, compared with Q3 2022, driven by the 2-per-cent 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 87.2 F, compared with 85.4 F 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 program (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 Richard Hew, president and chief executive officer.

Net earnings and sales revenues

Net earnings for the third quarter of 2023 were $13.9-million, a $3.5-million increase from $10.4-million for the third quarter of 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 36 cents per share, as compared with $10.3-million, or 28 cents 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 per cent compared with Q3 2022. The increase in kWh sales is driven by a 2-per-cent growth in the overall customer numbers and the increase in the average consumption of residential customers. Total customers as of Sept. 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 with 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 per cent and 3.7 per cent effective June 1, 2022 (deferred to Jan. 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 per cent for Q3 2023 compared with 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 21 cents per kWh, compared with 29 cents per kWh for Q2 2022. The company's average price per imperial gallon of fuel for the third quarter of 2023 decreased by 28 per cent to $3.80 in comparison with $5.27 for the third quarter of 2022. The fuel cost constitutes about 54 per cent of the customer bill for Q3 2023.

Key updates

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, totalling 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) program. This program provides energy-saving retrofits for lower-income households. Caribbean Utilities has provided home energy monitors and has conducted comprehensive energy audits on behalf of these households.

Capital expenditures

Capital expenditures for the nine months ending Sept. 30, 2023, were $78.3-million, an increase of $12.5-million or 13 per cent compared with $65.8-million for the nine months ending Sept. 30, 2022. These expenditures primarily relate to several projects highlighted below:

• Distribution system extension and upgrades;
• Generation replacements;
• Engine room five conversion to natural gas;
• Alternate energy technologies;
• Installation of utility-scale battery storage (continuing);
• Facility and auxiliary asset replacement costs, and other;
• Resiliency projects.

The company's third quarter 2023 results and related management's discussion and analysis (MD&A) are incorporated in this news release by reference. The MD&A contains a discussion of the company'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 on the company's website and on SEDAR+.

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 and distribution (T&D) licence and a 25-year non-exclusive generation licence granted by the Cayman Islands government. 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.

We seek Safe Harbor.