Belco Holdings Limited Releases Six Month Results

Bermuda Electric Light Company Limited (BELCO) results show that total kilowatt hour sales for the first six months of 2005 were 3.33 percent ahead of 2004.  Sales to residential and commercial customers were up 4.45 percent and 1.61 percent respectively, compared to 2004. The rise in residential sales was driven by a 2.39 percent increase in the number of new metered connections, as well as a 2.02 percent increase in average consumption.

Electric energy revenue increased 7.24 percent compared with the same period the previous year. This increase is due to increased sales to the residential and commercial sectors, as well as an increase in fuel adjustment revenue of 3.10 percent and a 1.50 percent increase in tariff rates granted by the Price Control Commission effective January 1, 2005. The increase in fuel adjustment revenue is offset by an identical increase in fuel cost. Fuel prices increased 10.56 percent to an average price of $58.96 per barrel of fuel compared to $53.33 per barrel in 2004. 

Overall operating expenses for the period were 4.86 percent higher than the first six months of 2004, reflecting the higher fuel prices as well as an increase in Energy Supply operating expenditures due to the timing of major overhauls. Overall fuel costs were somewhat offset by an increase in fuel efficiency to 711.48 kilowatt hours (kWh) per barrel in 2005 from 689.30 kWh per barrel in 2004.  This increase in fuel efficiency is due to the introduction of two new 14.5 megawatt (MW) base load diesel generators in April of this year. Operating expenditures for the first six month of 2005 also reflect increases in both staffing and company pension costs, resulting from flatter investment market conditions, compared to 2004.

Bermuda Gas & Utility Company Limited (Bermuda Gas) results for the first six months of the 2005 were 35.84 percent better than 2004 with net profit at $691,123 compared to $508,749. Overall 2005 year-to-date sales were 11.46 percent ahead of 2004, more than offsetting the increases in related costs, leading to an increase in gross profit from the prior year of 6.44 percent.

Holdings has decided to sell its 51 percent interest in BELCO Energy Services Company Limited (BESCO) to focus on its core electric and gas operating businesses. In this regard, Holdings has entered into negotiations with New Venture Holdings Ltd.

Holdings' share price increased 5.26 percent from $39.00 at June 30, 2004 to $41.05 at June 30, 2005.  This capital appreciation in our share price results in a dividend yield of 3.75 percent.

"Overall, the Company is very pleased with the first six months of 2005.  Results for the second half of this year, however, will be negatively affected by lost sales and increased expenditures stemming from the major fire at BELCO's main plant on Thursday, July 14 that resulted in an Island-wide blackout," said Garry A. Madeiros, President and Chief Executive Officer. 

The fire destroyed two switchrooms that played a key roll in the transmission of power from the plant to the City of Hamilton, leaving only two of seven feeds to the City.   Within 24 hours BELCO was able to restore power to all of the outlying areas of the Island and areas on the western outskirts of the City, but was unable to restore power to major portions of the City until Saturday evening, July 16, following the creation of new feeds by re-engineering the system, excavating and reconnecting cables. Holdings' Board of Directors has commissioned an independent review of the fire, and Government's Health and Safety Office is also investigating.

"From the time of the fire to now, the reconfiguration of the power system has taken place in four phases to give us maximum security from our currently compromised system.  We are in the process of preparing for phase five of the restoration which is the installation of a temporary switchboard facility by November 30.  In order to accomplish this, the building damaged by the fire is being dismantled and a temporary room will be re-built.  Once complete, this will address many of the current weaknesses in our system, provide us more flexibility, and a much stronger system and back up to the City of Hamilton.

"To date the findings of the various investigations have not yet been released. Over the next several months, we will endeavor to keep the community updated on our plant status, as well as findings related to the cause of the fire, and progress on the long-term solutions we are working on, which will bring on line three engines still stranded as a  result of the fire, which will provide further flexibility to the system," Mr. Madeiros said.