CUC profits soar as sales and clients grow

| 30/07/2021 | 113 Comments
Cayman News Service
CUC at work

(CNS): Operating income for CUC in the second quarter of 2021 increased by 3.3 million compared to this time last year when Grand Cayman was largely in lock-down. But the economic recovery, an increase in sales, a growth in customers as well as lower operating costs has seen net earnings almost double compared to the end of June 2020 and profits for the monopoly power provider soar. In a press release about the latest results, the company said its customer base grew by over a thousand, or more than 3%, to 31,719 and sales reached almost record peak demand, despite the borders till being closed.

President and CEO Richard Hew said that continued improvement in the economy has been reflected in these results, with a year over year increase in kilowatt hour sales and a peak demand of 111.2 megawatts, which is approaching the record peak of 113.5MW set in August 2019.

“Further improvements in the economy and the recovery of electricity sales beyond 2019 levels depends on the successful phased reopening of the tourism industry in September through November 2021, as announced by the Cayman Islands Government and is conditional on the Islands reaching an 80% full vaccination rate,” Hew said in the release announcing the results. “I am also pleased to report that CUC’s health and safety, environmental and reliability performances were all on, or ahead of targets set for the half year mark.”

Despite the struggles that many people are having in Cayman as a result of the border closure and the increasing cost of living, including rising utility costs, CUC shareholders can look forward to an increased dividend with earnings on Class A Ordinary Shares for Q2 of $8.4 million, or $0.23 per Class A Ordinary Share, compared to $0.13 per Class A last year for this quarter.

With the number of customers and demand for power increasing, there is an ever greater need to increase the amount of electricity generated via renewables. CUC said it continues to be engaged in discussions with the Cayman Islands Utility Regulation and Competition Office (OfReg) on key areas focused around renewable energy and a proposal for a 20-megawatt battery storage project and how best this project can be implemented so that customers can reap the benefits. But there was no indication that the small percentage of power generated through renewables has increased or emissions decreased.

As CUC inches towards a greener future, in the meantime the company is asking people to conserve as much energy as they can, especially during the summer months when air-conditioning use grows, to cut emissions and their bill, given that oil prices are also rising.

“It is summer time and with children out of school and at home for long periods of time during the day, customers are using more electricity for air-conditioning,” Hew said. “Global fuel costs are also trending upwards, and as such we remind our customers to monitor and manage their electricity consumption to reduce costs using the smart meter consumption data and energy efficiency tips available on CUC’s website.”

See the full results here.

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Category: Business, utilities

Comments (113)

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  1. Anonymous says:

    Are they willing to rollback the latest rate increase? I thought not!

  2. Anonymous says:

    I think some perspective is needed here. According to the report, CUC made US$8.6m on sales of 170.8m kWh in Q2; that’s net earnings of CI$0.04 per kWh. Rate is CI$0.26/kWh so that’s a margin of 18%. In the context of markup of goods and services in Cayman that doesn’t sound particularly egregious; what’s reasonable, 10%? Doesn’t make much difference to the average bill.

    Also from the report they produced 171.9m kWh with an efficiency of 18.84 kWh per Imperial Gallon so must have used 9.12m IG diesel at $0.85 duty per IG that’s $7.75m in fuel duty to CIG. In other words CUC made a record quarterly profit, just beating the duty CIG makes off them every single quarter (assuming my maths is right).

  3. Anonymous says:

    CUC is a rate-regulated entity (in common with most electrical utilities globally), with rates set to earn a constant return on capital (over time). For CUC, this is approximately 5% (and its dividend yield to investors is just under 5%).

    Electrical utilities are necessarily monopolies everywhere because of the physical infrastructure required (not going to have multiple sets of powerlines).

    Cayman’s electricity is relatively expensive as it is generated by heavy fuel oil (which is expensive and price fluctuates) and a low customer base relative to the cost of a physical plant/infrastructure (if population was twice the size, twice as many customers to spread out the fixed capital costs).

    • Anonymous says:

      And if you believe that, I am selling some gold mining stock that will increase 10-fold in the next two years. I have 200 shares priced below the market price. How can you lose?

    • Anonymous says:

      It’s only expensive compared to the US. The simple fact is CUC’s all in price/kWh is more or less the same as the UK, Europe, Japan, much cheaper than comparable islands like USVI and Bermuda and cheaper even than Germany, Ireland and Jamaica. USVI is double what we pay!

      • Anonymous says:

        The US is a big comparison. Why do you think we should pay what Japan pays, or Germany. Actually the countries you named have high prices on purpose. I have not heard anyone on Cayman asking to follow in their footsteps.

        • Anonymous says:

          Why would the US be a good comparison? It’s like apples and elephants. We’re comparable to small island systems. The US gets to diversify capacity risk across large transmission networks, which dramatically reduces costs.

  4. Anonymous says:

    I live in a 2 bed 2 bath apt with my two kids. Family of 3. I have tried various things to reduce my CUC and water bill (WA another crook).

    * Myself and my kids bathe only once a day
    * I do laundry of 3 loads once per week
    * Changed all my bulbs to LED
    * Run my AC at 78 degrees and on a timer set at 80 in the days when we are at school/work.
    * I mop my floors twice a week and wash dishes every other day
    * I do not wash my car at home, instead I pay to get it cleaned every few weeks
    * I go to the supermarket once a week and “try” to stick to a shopping budget of $500 per month but that is next to impossible

    Despite my efforts, I do not see any big change in my CUC $375 per month average (increasing every month since Feb) and water for $135. My place is newly built in 2020 and properly insulated. Dunno wtf else I can do. Cost of living in Cayman is a mofo. It just keeps soaring to new heights and to the point where even average earners like my self are struggling. I have not been able to successfully save $100 in over 10 months. I brace myself before I open any bill. Government needs to address COL. Start there PACT.

    • Anonymous says:

      I also have a 2 bed 2 bath, our electricity bill on average is about $200 per month, I expect about a $50 increase through the summer.

      We have blackout curtains closed during the day. The A/C is set to 85 degrees during the day. It runs at 80 degrees from 5 – 10:30 and down to 78 degrees from 10:30 to 8:00.

      I only use the dryer for sheets and towels, the rest of the clothes get hung on racks to dry, if placed under a ceiling fan they dry in a couple of hours.

      • Anonymous says:

        Almost the same.
        My normal bill is around $165 (2bd/2bth) by keeping it @ 80 when I am home, 83 when I am out and in the summer, 78-79 when sleeping.
        Dryer is only used for towels, racks for the rest of the clothes. The dryer use alone can/will crash your CUC bill.
        I also turn off my water heater 2-3 days at a time. It stays warm enough for that long.

        And P.S. NEVER keep the a/c completely off. Do you want mold? Because this is how you get mold.
        The condensation will collect and will cause that mold smell you may be smelling… (A friend used to turn it off during the day and her place smelled pretty bad. She was used to it so didn’t notice)

        • Anonymous says:

          Not true on the dryer. I calculated the energy the dryer uses. It’s about 50 cents to run for half an hour and I have an old dryer.
          I also calculated the water used to flush the toilet and it adds up to about $30 per year.
          Poop at work!

    • Anonymous says:

      If nobody is home, setting your AC to 80 is actually wasting energy (in the sense that nobody is there to need/enjoy the cool air). Set it higher (85-87 is where I put mine) so your equipment runs less often throughout the hot part of the day and just use the timer/programming to bring it down to where you want it for when you typically arrive home.

    • Anonymous says:

      I live in a small studio apartment and only use the AC sparingly. $110 / month power bill. It’s ridiculous how expensive it is to just be able to stay cool in the summer and its only going to get worse. Next world war will be the people vs greedy ass corporations and governments who keep taking more and more every day. Eventually, even the reasonable people will have to snap.

      • Anonymous says:

        I have a studio apartment and keep the a/c at 78 24/7. Bill was $35 this month. I’m not going to war over $35 LOL

    • Anonymous says:

      That CUC bill seems very high to me for the size house. How do you know it is “properly insulated”?

    • Anonymous says:

      Not sure about proper insulation there if that is your A/C temp and it is 2 bed 2 bath. My 2 bed 2 1/2 bath is on 74 during the day, 68 at night, and my bill is 300 or less, and was also built last year.

  5. Anonymous says:

    Electricity bills create the greatest hardship in these islands. How can a sudden $300 + monthly increase be justified? My family and I are very frugal in our electricity usage, use LED bulbs and do the things we are told will reduce our bills – makes but little difference.
    Electricity bills and house insurance costs are through the roof and this government needs to do something about it.

    • D. Truth says:

      Yes, the government should do something about it. Some countries have excess profits laws……. but not the ones with greedy leaders.

    • Chris Johnson says:

      Hi feel for you. The problems are twofold. Firstly the cost of oil continues ro rise and is now about $72 a barrel and I do not see it going down as the world reopens.

      Secondly insurance premiums are governed by the liklihood of hurricanes. Unfortunately lending bank want to see their clients have full insurance.

      The answer to the former is for government to reduce the duty on oil for CUC. However that gives a benefit to rich and poor alike. That is why I say give the smaller S consumer a break.

      Having said all of this the disparity of the rich and poor grows daily. Cig needs a think tank on this and I for one would be happy to join to create some thinking outside the box.

      • Anonymous says:

        Hello Chris. A very truthful and helpful comment. Govt would have to keep in mind excess profit laws would have to work on all business including food stores and water companies etc. Caymanians are investors in CUC so it would be folly to try and gut the company. It is a worrying time as costs world wide are going up. Food in the US went up significantly and materials and certain food products are hard to come by in the US. You are right this requires out of the box thinking and those of us that have done wiell cannot afford to live in our ivory towers.

    • Anonymous says:

      That sounds excessive. You mind posting the amount of the full bill, how much sqft?

  6. Anonymous says:

    My CUC bill has been going up each month since April – this last bill is almost the same amount as my mortgage payment.

    Pact has to do something about this – most of their voters voted them in – to do something about the high cost of groceries, fuel and CUC.

    If Pact doesn’t do something – then they probably won’t get back in next election.

    CUC is stop off!!

    • Anonymous says:

      PACT is trying to do something about it. They’re fighting climate change so it will be less hot from April through the summer. Hopefully they can turn things around for you before the next election!

    • Anonymous says:

      I’m wondering if you have tried to do anything about your AC? Thats what drives up your bill. You cant gut the company because you have to have AC and dont do anything to economize.

  7. Anonymous says:

    I’m looking forward to my dividends!!

  8. Anon1 says:

    The PACT government were elected because ‘Community Creates Country’. A country where billionaires pay the same tax as the poor and government quangos protect business profits over the poor’s access to basic needs; including electricity. Why oh why do the electorate here trust any of them. You are living in a shed with no water and electricity because your representatives are incapable of making lasting change. There needs to be social empowerment in these islands because the average man on the street is consistently abused for their vote while nothing changes. #NoPlanPanton doesn’t give a sh1t about the average man until it’s time to distribute turkeys for their votes. WAKE UP CAYMAN!!!

    • Hangon Snoopy says:

      Panton what????? You say he doesn’t give a sh1t about us honest men? Say it ain’t so, Mister Premier! Surely to God you can’t be as bad as your recent forerunners!!!

    • Anonymous says:

      Cuc light bill is the last thing on PACT mind. They can afford their monthly CUC thats for sure

  9. Anonymous says:

    If you look into CUC’s contract the shares are basically inflation protected bonds. It looks like Pact was right, population has increased and that inflation has soared pushing dividend higher. Some of us were prepared

  10. Anonymous says:

    CUC I have no problem with your profits, for the most part. It’s called free enterprise and in your case a monopoly.It is what it is at this time. What I abhor about your company is the fact that: the persons you disconnect (usually the vulnerable, struggling or those basically trying to make ends meet) you charge them KYD60 reconnection fee!! Just for simply punching a button on a computer to disconnect. So someone gets shut-off for $175 and they have to pay that and find $60 more dollars to connect. Meanwhile, you post making millions. Go figure you greedy uncooperative corporate “community” giant. Unconscionable. So much for COVID adjustments to “help” the community. What’s reasonable you may ask? $10 – $25 max!

    • Anonymous says:

      They aren’t “posting” about making millions. They are a listed company that by law has to present their accounts for shareholders.

      • anon says:

        CUC are making millions from their monopoly, CAL are losing millions from their monopoly. How about CUC shocking us all and not billing CAL for their electricity consumption.

      • Anonymous says:

        Talk about a red-herring point. What exactly does that take from the point being made?

  11. Anonymous says:

    Monopolies are the problem…Eh? They broke up the telecoms and we have several fuel suppliers. See any improvement?

    • Anonymous says:

      Excuse me but the fuel companies make sure they are within .01-.02 per gal of each other. THAT is the easy part! Price fixing that is…
      And do not think they do not communicate with each other about when they will increase.
      All they have to say is that they bought it in bulk when the cost was high. But NEVER a mention about the reason it’s so high when the cost in the USA was UNDER $2!!! (not that long ago.

  12. Anonymous says:

    Eh? They broke up the telecoms and we have several fuel suppliers.

  13. Anonymous says:

    Sales went up only three percent, but net profit went up nearly 100%! So they made a lot more money off of basically the same customers as last year. There is a news story in there somewhere. Was there a rate increase? Is their fuel free now? The doubling of profits on a tiny increase in electricity sales needs more explanation than is given in their press release or this article. Does the regulator have anything to say? What is going on? I know I have paid some giant bills lately even though my house stands vacant due to the ‘rona.

    • Anonymous says:

      Nah, it’s just simple math when you consider changes in large numbers (total sales/revenues) and smaller numbers (net earnings) as percentages. You’re talking about relative change (percentage) which makes the magnitude of the base number matter, rather than an absolute change. If I turn 42, twice as much time has passed from 40 as when I turned 41, but only 2.5% more from when I was born.

  14. Anonymous says:

    Government charges C U C high fuel import duties, that why the fuel surcharge are so high.

    • Anonymous says:

      They charge by the gallon on fuel. Cost is irrelevant on fuel duty.

    • D. Truth says:

      If this is true, how about giving us some actual figures?
      I think the government has been the major cause of most of our high prices .

      Will PACT be any different? They could make things much better for Caymanians. Are you listening, PACT?

  15. Anonymous says:

    Each of us have it in our control to adjust our useage and therefore our costs. A degree of 2 higher on the A/C, change bulbs to LED, turn items off when not in use, etc.

    • Anonymous says:

      Or………….. You can just buy candles.

    • Beaumont Zodecloun says:

      Thanks Mom.

      Love you too.

      • Anonymous says:

        I’m glad your mother has tried to instill in you an understanding of personal responsibility.

        • Beaumont Zodecloun says:

          She did, and I am grateful for those skills. What she did not do is turn up her nose and talk down to me and lecture about things for which I could not control.

          She is also not really fond about overstating the obvious. Mom is quirky like that. She thinks we should work together more, instead of talking shit. I believe that is a direct quote.

          • Anonymous says:

            Ah, I think it get it. The facetious response on your part to sound advice about how we can lower our electricity use and literally do things in our control was engaging in “working together and not talking shit.” Quirky, indeed.

    • Anonymous says:

      That BULL CRAP DOES NOT WORK..I have changed every single light bulb INSIDE & OUTSIDE of my house. I wash and dry 2 single loads of clothes every week occasionally 3 loads. I turn off lights that’s not being used. We have Energy Efficient Mini Split AC units. WHAT MORE SHOULD I DO?? CUC is the GREEDY BASTARDS THAT IS RAPING US ALL AS THEY SIT AND BOAST OF THE GREAT PROFITS AGAIN BECAUSE GOVERNMENT AFTER GOVERNMENT GAVE THEM PERMISSION TO DO SO YEARLY.WHILE THE POOR PEOPLE CONTINUE TO SUFFER AND PAY THE HIGH PRICE OFFREG NEEDS TO GO AS THEY ARE AS USELESS AS A SCREENDOOR ON A SUBMARINE..I hope this PACT government really look into the HIGH PRICE we pay for fuel consumption on these bills when they know they bought it cheap. POOR PEOPLE CANT WIN FOR LOOSING..

      • Anonymous says:

        Of course it works or does your house somehow defy the laws of physics? If you use less, you get charged less. Read your meter, check it against your bill. Really not hard.

      • Anonymous says:

        Buy some CUC shares and earn between 6 and 7% on your money guaranteed. And after that maybe hook up a small off the grid solar system to power your ACs. Man, just do something and stop depending the Govt

      • Anonymous says:

        Ever tried preparing to lobby for change before their contract is due for renewal?
        Some years away now tho.

    • Anonymous says:

      Hey, 11:28 am; What great advise! I wonder if we can survive on grass….. or fresh leves….? And please do tell us more of your plan for saving money! You might not beleve it, but some of us don’t even have bank acounts, etc. When I was younger, I had a car, but now I don’t and I stil can’t make ends meet on my expenses.

  16. Anonymous says:

    This is all relative. Growth these days just means returning from what took place in the pandemic. Last year at this time, Cayman was in strict lockdown for a large part of the same three months. Most businesses were closed. It’s instructive to look at the results in comparison to 2018 and 2019, which show this isn’t that much of a change.

  17. Anonymous says:

    Thus is funny “economic recovery”. Who is running your books, spineless biden?

    • Anonymous says:

      Keep your American political jabs out of Caymanian business discussions please, 6:23 am

      • Anonymous says:

        Oh? Shut up. Where are you when every other post says something ignorant about ‘Trumpsters’ and comparing us to a country the size of USA, among a lot of other things!

      • D. Truth says:

        O.K., but be advised: He has a spine…. but no brain.

  18. Anonymous says:

    Profits soar because they are a monopoly. Not because of new customers.

    • Anonymous says:

      That makes no sense. They were a monopoly a year ago too.

      • Anonymous says:

        Well, gahhlee! They never raise their prices, do they?

      • Nattalie says:

        It DOES make sense! They have a monopoly, therefore they don’t have to worry about any competition selling at lower prices…………… yet!

    • Anonymous says:

      There are new customers! Have you seen the amount of new apartments being constructed?! All of those new buildings/apartments have electricity running to them! So yes the profits have gone up accordingly.

  19. Anonymous says:

    Profits didn’t soar because ofreg and government approved rate increases to allow cuc to recover profits lost during covid lockdown?? I hope thier share holders aren’t so niave. Nothing to do with new customers. Just the fact that they have been allowed to recupe lost profits from last year.

    If only the real world worked like this.

  20. Anonymous says:

    Thank you CUC for your efficient management and a great quarter. I am reinvesting my dividends as a vote of the confidence that the share price will increase accordingly. I hope
    that the disgruntled and discourteous posters would take some time to read the latest company results and make a commitment to invest some funds. It is my opinion that CUC is going to take off exponentially when the borders reopen. Don’t say you didn’t know as this report is the best indicator of future profits. I’m begging you to participate for the sake of your children and grandchildren. All the best and please resist the need to resort to foul language.

    • Anonymous says:

      It’s a monopoly!

      • Anonymous says:

        So make your own electricity if you can do it cheaper no one stopping you.

        • Anonymous says:

          But cuc is actually stopping me. I have the means to go solar but can’t get approved to make it worthwhile.

          • Anonymous says:

            Go off grid. What’s stopping you?

          • Anonymous says:

            No they aren’t. They are stopping you having solar AND having the free option of hooking up to the grid. If we all want grid tied solar then we are going to have to accept that we’re going to have to pay a large “standby” charge for the grid and generators to sit idle then kick in when a cloud passes overhead. In the mean time we don’t accept this so CUC are a bit stuck. The issue needs political leadership.

  21. Anonymous says:

    We even run out of cement!

  22. Anonymous says:

    And charging this whole heap of money from poor people for fuel cost, actually my fuel cost is more my light bill and who you going to turn to, poor people have no one, very sad

    • Chris Johnson says:

      CUC should reduce the rate for the poorer people, many of whom cannot afford the luxury of air conditioning. Once the tourists arrive their profits will skyrocket.

      • Anonymous says:

        Sounds like government policy to me?

      • Anonymous says:

        How about we stop the mass importation of poorer people Chris, esescially if we have to subsidies them? Imported Cheap Labour, and it’s ability to settle here, is literally killing the long term economic viability of Cayman. It undercuts Caymanians seeking a living wage, and creates thousands of new Caymanians with no homes, investments or ability to maintain themselves. If we subsidize their utility bills it would just mean most of Cayman would have to pay more.

        • Chris Johnson says:

          Thank you for your comment. I have to say I was really addressing the Caymanian home owner rather than an overseas person, so your point is well taken.
          Bush did not help by granting all those citizenships but there again his capacity to think is rather limited.
          The real answer is for Caymanians to reach out to the premier to make known their concerns.
          There are several ways cig can assist the poor and not at the same time give them handouts. I have several ideas but being precluded from standing as a politician I cannot make any significant contribution.

          • Anonymous says:

            Well first of all, we all knew you meant Caymanians (‘cept for that one guy at 8:45a). Not sure why that person would think you were discussing giving benefits to foreign workers that choose to come live/work here…
            And second, I am LOVING that last line!!
            If they only knew how successful we could be if we were allowed to utilize the gold mine of educated broadminded driftwood they have floating around here, eh!?
            Even as a consultant…

            • Anonymous says:

              The person was pointing out that foreign workers with no means now make up more of our “Caymanian” population so yes we would be subsidizing them. Every time a policy is implenented to assist our nationals we get no benefit as the aggresive new Caymanians are first in line. The Constitution should have designated a Caymanian as one Cayman born of at least one Cayman born Grandparent/Parent.

    • Gowment OfLeg says:

      Blame the govt and OfReg for this. They could have demanded a shift to solar (cheap energy source) to help significant reduce and eliminate the fuel factor cost.

  23. anonymous says:

    Counting my dividends.

    • Anonymous says:

      Well done CUC.
      Your success should encourage all users to buy shares so they too can get some rewards.
      Complaining is so much easier but it won’t help pay your bills.

      • Anonymous says:

        Disgusting, isn’t it!

      • Anonymous says:

        To 11:09 am – glad you can afford to buy shares. Some of us can barely afford to pay our high CUC bill – much less buy shares.

        CUC is robbing the poor to pay their shareholders!

        If I use less electricity than I am using now – it would be to use none at all.

        Even then – I would probably still get a high bill from CUC.

  24. Anonymous says:

    Ain’t this some sh!t!!! It’s is so baffling that in these hard times our Government has allowed CUC to continue to f&@k the people. smdh

    • Anonymous says:

      Yes, its hard times. Very hard times, but you may as well then demand that supermarkets etc also reduce their profits. In fact food and water are more important than electricity to us and food costs here are very high. At least with CUC you can buy shares and enjoy some of the profits. All businesses are there to make a profit through fair means not to make a loss. BTW a large number of the shareholders are in fact Caymanians of all walks of life.

      • Anonymous says:

        I would invest in utilities, however never one that so profoundly screwed the people. The cost of water is one of the best deals we have here. Water Authority. Propane is a good value also, however I’m not certain they are publicly traded.

      • Anonymous says:

        Yep! Is it just a coincidence that most of them are in government?

    • Anonymous says:

      They are f£&@ing the people over double by making it difficult for the average person to benefit from their own renewable energy. Seems they have a back door to OfReg too so count that as three ways. Yet CIG seem to allow the proliferation of monopolies in Cayman so this situation is not about to change any time soon.

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