BELCO Holdings Limited Releases 2007 Results

Hamilton, Bermuda: May 8, 2008 - BELCO Holdings Limited (Holdings) consolidated net earnings for 2007 were $20,399,518, down 5.64 percent from the $21,618,657 achieved in 2006.  Overall electricity sales increased less than projected in 2007. This was a direct result of conservation brought about by higher fuel cost reflected in the Fuel Adjustment Rate, as well as milder summer temperatures. Earning were also affected by a significant write-off of BELCO inventory during the year, as well as contract penalties paid as a result of canceling the planned development of a new Bermuda Gas warehouse.

BELCO ended the year earning $19,217,850 compared to $20,659,192 in 2006.  While the number of residential customers increased 2.53 percent from 30,917 to 31,699, the average kilowatt hour (kWh) usage per customer decreased from 730 kWh to 726 kWh per month. 

A year-long review of BELCO's physical inventory resulted in the write-off of $1.8 million in inventory.  The review was done in conjunction with the redesign of the warehouse layout which will allow for inventory consolidation and implementation of new processing systems.  The Company also paid $684,000 to contractors in contract cancellation penalties and development costs incurred to date to build a new Bermuda Gas warehouse so that the property could be incorporated into plans for expansion of the Central Power Plant site.

The cost of fuel increased $5,708,544 in 2007 to $85,767,287 from $80,058,743 in 2006 with the average price 6.30 percent higher than the previous year.  The cost of fuel reached its highest level ever in July with BELCO paying $89.17 per barrel for Heavy Fuel Oil and $109.85 for No.2 Diesel Oil. This resulted in the Fuel Adjustment Rate reaching a new high of 11.50 cents per kWh, accounting for approximately 36 percent of the average residential customer's bill. Fortunately, as a result of improved utilization of new plant, BELCO was able to achieve greater fuel efficiency of 705 kWh per barrel of fuel, compared to 702 kWh in 2006, which softened the price impact.  The peak load remained essentially unchanged at 117.7 megawatts, compared to 117.2 in 2006.

Managing fuel expenditure is vital to BELCO, as it is to our customers.  In order to get the best price per barrel of fuel, while also ensuring that the security of our fuel supply is protected, BELCO invited seven companies to submit proposals to supply fuel.  Four vendors, which included ESSO, our sole supplier for the last 50 years, responded to the Request for Proposal.  As a result, the contract for Heavy Fuel Oil, which represents 82 percent of our consumption, was awarded to BP Products North America Inc., while ESSO Bermuda continues to supply the No.2 Diesel Oil. 

Bermuda Gas ended the year with net earnings of $1,127,895, a significant 57.38 percent improvement over 2006 results. This increase in earnings is largely attributed to increased gas sales, as well as better results from appliance sales due to a full first year at the centrally located City of Hamilton premises.

The Annual General Meeting of BELCO Holdings Limited will be held on Thursday May 22, 2008 at the Bermuda Underwater Exploration Institute (BUEI) at 3:30 p.m.