Mr. Richard Hew reports

CARIBBEAN UTILITIES COMPANY, LTD. (CUC) ANNOUNCES 2023 YEAR END RESULTS AND STRATEGIC MILESTONES

Caribbean Utilities Co. Ltd. has released its audited results for the 12 months ended Dec. 31, 2023 (all figures are in U.S. dollars).

Highlights for 2023 were as follows.

Financial growth:

• Net earnings increased by 17 per cent to $38.7-million;
• 8 per cent in kilowatt-hour sales;
• 1-per-cent increase in total customers;
• 9-per-cent increase in system peak demand to 124.1 megawatts.

Investments in sustainability:

• Capital expenditures of $97.6-million included projects to improve grid resiliency, generation asset upgrades and construction of infrastructure to transition to lower carbon energy;
• Progress made on installation of the 20-megawatt battery energy storage system;
• Renewable energy supply contracts reached 20.5 megawatts in capacity for customer programs; the five-megawatt solar farm is in addition to this capacity.

Carbon reduction initiatives:

• Completion of request for qualification for liquefied natural gas supply procurement;
• Life cycle upgrades for 68-megawatt generation are in progress with expected completion of two of the units (32 megawatts) in 2024;
• Rollout of new electric vehicle fleet and execution of EV charging station program.

Operational achievements:

• System Average Interruption Duration Index is the tool used to measure the amount of outage time. In 2023, the company achieved an average annual outage duration time of 1.7 hours per customer, which surpasses the U.S. average 2022 results.

Community commitment and recognition:

• Completion of phase 1 of land acquisition program to support future renewable energy facilities;
• Investors in People gold certification for outstanding achievements in employee support;
• Active participation in the National Energy Policy revision through representation on the advisory council;
• Commitment to community development showcased through partnerships and support programs.

The company continues to deliver reliable and safe electricity service to its customers. The major projects that are aimed at reducing costs and carbon emissions, namely, the life cycle upgrades of five engines (68-megawatt capacity) extending their useful life, improving fuel efficiency and preparing them to operate on natural gas, as well as the implementation of the battery energy storage systems, have progressed well, and the company looks forward to the completion of these projects. During 2023, there was a new electricity peak demand record of 124.1 megawatts set on Grand Cayman. The annual average record temperatures experienced and the associated increase in cooling load, along with a 1-per-cent growth in connected customers, contributed to the peak demand growth and the 8-per-cent increase in energy (kilowatt-hour) sales.

Net earnings and sales revenues

Net earnings for fiscal 2023 were $38.7-million, a $5.5-million increase from net earnings of $33.2-million for the 12 months ended Dec. 31, 2022. After the adjustment for dividends on the preference shares of the company, earnings on Class A ordinary shares for fiscal 2023 were $37.7-million, or $1 per share, as compared with $32.2-million, or 86 cents per share, for fiscal 2022.

Sales in kilowatt-hours for fiscal 2023 were 727.0 million kilowatt-hours, which are an increase of 52.9 million kilowatt-hours or 8 per cent compared with fiscal 2022. The increase in customer consumption and the rise in temperatures had an impact on this increase. The average temperature for fiscal 2023 was 84.0 F compared with 82.9 F in fiscal 2022. Total customers as of Dec. 31, 2023, were 33,611, an increase of 492 customers or a 1-per-cent increase from fiscal 2022.

Fuel factor consists of charges from diesel fuel and lubricating oil costs, which are passed through to consumers on a two-month lag basis with no markup. The average fuel cost charge rate charged to consumers for fiscal 2023 was 24 cents per kilowatt-hour, compared with the fuel cost charge rate of 27 cents per kilowatt-hour for fiscal 2022. The average fuel price per imperial gallon for the year ended Dec. 31, 2023, was $4.24, compared with $4.37 for the year ended Dec. 31, 2022. In 2022, customers also received credit in relation to fuel costs through the Cayman Islands government-funded fuel relief program and the Caribbean Utilities fuel cost relief program.

"Strong earnings continue to place the company in a position to support appropriate levels of capital investment in infrastructure projects that ensure that we continue to deliver safe, reliable, least-cost and sustainable energy to the people of Grand Cayman," said Richard Hew, president and chief executive officer.

Key updates

In 2023, the company maintained its Investors In People gold level accreditation. Caribbean Utilities has a primary goal to recruit, retain and develop the most talented individuals within the utility industry. The company aims to be an organization that employees choose to work for and wants to consistently demonstrate commitment to the team through active participation in the community and training programs. This is the company's third-consecutive gold certification and underscores the company's commitment to creating a positive work environment that fosters growth, innovation and excellence by continuously investing in its people.

The company made good progress on preparing Grand Cayman for a transition to renewable energy as a primary resource. Partnerships with key suppliers through engineering, procurement and construction contractors for solar plus storage projects were secured, and plant designs were prepared for tender as the company readied to bid for the expected OfReg competitive solicitation for utility-scale solar.

While the renewable energy market is being developed, the company continues to make meaningful strides with its contribution to the national energy policy's carbon reduction goals. In 2023, the company rolled out the electric vehicle charging station program. The project aims to provide additional public charging stations throughout the island. By creating this program, customers now have easier access and more options to charging stations. By the end of 2024, it is anticipated that 20 additional charging stations will be installed and activated across the island.

Considerable progress has been made on the battery energy storage project. At the end of January, 2024, the company will have completed the first set of the 10-megawatt installation at its Hydesville, West Bay substation. The batteries will assist with the transition from diesel-generated energy dependency and provide a reduction in carbon emissions and cost savings for its customers.

The request for qualification for the supply of liquefied natural gas was completed in 2023, in line with the national energy policy and the company's integrated resource plan. Caribbean Utilities is committed to increasing the use of cleaner energy, reducing energy costs and reducing greenhouse gas emissions over the long term. This battery energy storage system and the conversion of the engines to utilize natural gas will assist with these primary goals.

Capital expenditures

Capital expenditures for fiscal 2023 were $97.6-million, an increase of $1.8-million from capital expenditures for fiscal 2022. These expenditures were primarily related to the following projects:

• Distribution system extension and upgrades;
• Generation replacements;
• Life cycle upgrades;
• Alternative energy technologies;
• Installation of utility-scale battery storage, which is continuing;
• Facility and auxiliary asset replacement costs;
• Other resiliency projects.

The above capital projects will enhance the reliability and safe delivery of electricity service to the customers of Grand Cayman. Most of these projects will also assist in the reduction of carbon emissions, which is in line with the company's target of 60-per-cent reduction of emissions by 2030. These projects will also assist the company with providing better cost-saving solutions to customers as Caribbean Utilities transitions to more renewable energy sources.

Caribbean Utilities' news release, annual 2023 results, and related management's discussion and analysis can be viewed at Caribbean Utilities' website (investor relations/press releases) and at 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 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.