All of Holdings' business units performed well, although Bermuda Gas and Utility's performance is down on 1997 as substantial costs were incurred in the company's relocation to Wesley Street and the amortization of capital improvements to the new showroom. BELCO results are solid with kilowatt hour (kWh) sales slightly ahead of last year as new large and existing demand customers are using significant levels of energy. BELCO Energy Services Company (BESCO) has turned the corner and is well on its way to making its earnings budget for the year.
The increase in earnings was achieved in spite of significant but anticipated business start-up costs associated with Holdings' investment in Quantum Communications Limited.
BELCO
The dollar revenue of electric energy sales are down marginally from the same period the previous year. This is a distortion however, and does not reflect the actual performance as fuel adjustment revenue has actually decreased approximately $2 million. This is a result of lower fuel prices of 12.57%. In fact, electricity kWh sales were up 4.24% for the first six months of the year when compared with the same period in 1997. The increase is due primarily to a 6.84% jump in commercial or demand sales, partly the result of new demand customers, such as CedarBridge Academy and the Bermuda Underwater Exploration Institute, and partly to increased usage by existing demand customers. In the electric residential category, kWh sales increased 3.01% over the same period last year.
Electricity operating expenses are down $1.6 million from the same period in 1997. The decrease in expenses is largely the result of greater fuel efficiency, from 610 kWhs per barrel in the first half of 1997 to 637 kWhs per barrel for the first six
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months of 1998. The rise in efficiency helped to offset an increase in the number of barrels used which resulted from an increase of 10 million or 4.2% in kWhs generated. Additionally, fuel adjustment revenues and fuel adjustment costs offset each other. Fuel prices, as mentioned above, are 12.57% lower as the average price per barrel used was $40.97 compared to $46.86 during the first six months of 1997.
The peak load rose 3.67% in the first six months of 1998 over the same period last year to reach a new record high of 90,400 kilowatts. The load factor also increased 4.47% to 68.86% when compared to last year. It is anticipated that with continued high summer temperatures, both the peak load and load factor will continue to increase during the second half of 1998.
BGU
BGU total sales increased 2.3% compared to the same period last year. A decrease in gas sales of 2.88% was offset by increases in appliance and service and parts sales of 12.54% and 6.82% respectively. Gross profit from sales was up 4.24%. Overall income for BGU dropped a significant 29.05% to $263,825 from $371,867 for the first half of 1997, as a result of increased operating and administrative costs of 11.4% due to the relocation and refurbishment of BGU's Wesley Street premises.
BESCO
Sales from BESCO, now in its third year of operation, improved dramatically during the first half of 1998 and the company is now making a profit. Contributing to BESCO's improved results is its involvement in several large engineering projects, including the Central Utility Plant at King Edward VII Memorial Hospital and the BF&M/ACE Limited building. Additionally, BESCO has seen increased sales of its surge protection equipment.
For additional information, please contact Robin McPhee, Corporate Communications Manager, at 299-2814.