1、Caribbean Utilities Company,Ltd.2022 Annual Report Caribbean Utilities Company,Ltd.2022 Annual Report 1 About the Company Caribbean Utilities Company,Ltd.,(“CUC”or the“Company”),commenced operations as the only electric utility in Grand Cayman on May 10,1966.The Company currently has an installed ge
2、nerating capacity of 166 megawatts(“MW”).The record peak load of 113.6 MW was experienced on September 11,2022.CUC is committed to providing a safe and reliable supply of electricity to over 33,000 customers.The Company has been through many challenging and exciting periods but has kept pace with Gr
3、and Caymans development for over the past 56 years.About the Cayman Islands The Cayman Islands,a United Kingdom Overseas Territory with a population of approximately 75,000,are comprised of three islands:Grand Cayman,Cayman Brac and Little Cayman.Located approximately 150 miles south of Cuba,460 mil
4、es south of Miami and 167 miles northwest of Jamaica,the largest island is Grand Cayman with an area of 76 square miles.A Governor,presently His Excellency Mr.Martyn Roper,is appointed by His Majesty the King.A democratic society,the Cayman Islands have a House of Parliament comprised of representat
5、ives elected from 19 electoral districts.Caribbean Utilities Company,Ltd.2022 Annual Report 2 Table of Contents Highlights 3 Letter to Fellow Shareholders 4 Managements Discussion and Analysis 9 Managements Responsibility for Financial Reporting 32 Independent Auditors Report 33 Consolidated Balance
6、 Sheets 37 Consolidated Statements of Earnings 38 Consolidated Statements of Comprehensive Income 39 Consolidated Statements of Shareholders Equity 40 Consolidated Statements of Cash Flows 41 Notes to Annual Consolidated Financial Statements 42 Ten-Year Summary 65 Board of Directors 67 Officers 68 S
7、hareholder and Corporate Information 69 Readers should review the note on page 9 in this Annual Report,in the Managements Discussion and Analysis section,concerning the use of forward-looking statements,which applies to the entirety of this Annual Report to shareholders of CUC.Caribbean Utilities Co
8、mpany,Ltd.2022 Annual Report3 Highlights FinanciaFinancial l ResultResults s i in n B Brierief f(Expressed in thousands of United States dollars unless stated otherwise)YeaYear r EndEnde ed d DecembeDecember r 3131,20202 22 2 YeaYear r EndEnde ed d DecembeDecember r 3131,20202 21 1 ChanChang ge e%Op
9、erating Revenues2 267,33667,336 198,47835%Electricity Sales Revenues1 101,55101,551 97,5204%Fuel Factor 1 159,85659,856 95,20868%Renewables5 5,929,929 5,7503%Total Operating Expenses2 23 35 5,26,268 8 168,25540%Finance Charges4 4,77,775 5 4,808-1%Net Earnings for the Year3 33,3,1 17979 30,3199%Total
10、 Assets7 72 26 6,53,539 9 634,15015%Total Shareholders Equity3 308,08,2 23434 297,8783%Cash Flow Related to Operating Activities5 56 6,1 18888 62,009-9%The following items are fully stated,not in thousands:Earnings per Class A Ordinary Share0 0.86.86 0.799%Dividends per Class A Ordinary Share(paid a
11、nd declared)0 0.700.700 0.7000%Book Value per Class A Ordinary Share8 8.18.18 7.943%Class A Ordinary Shares Market Price:High1 15.755.75 15.35 Low1 12.52.50 0 14.01 Year-end1 13.003.00 15.00 PerformancPerformance e Net earnings for the year ended December 31,2022 were$33.2 million,a$2.9 million incr
12、ease from net earnings of$30.3 million for the year ended December 31,2021.This increase is primarily attributable to a 2%increase in kWh sales,a 5.4%increase in base rates effective June 1,2022and lower finance charges and transmission&distribution costs,partially offset by higher general and admin
13、istration and consumer services costs.Dividends paid and declared on the Class A Ordinary Shares were$0.70 per share.The Class A Ordinary Shares(CUP.U)traded on the Toronto Stock Exchange at a high of$15.75 per share in 2022.RatRate e o of f ExchangExchange e The closing rate of exchange on December
14、 31,2022 as reported by the Bank of Canada for the conversion of United States dollars into Canadian dollars was Cdn$1.3544per US$1.00.The official exchange rate for the conversion of Cayman Islands dollars into United States dollars as determined by the Cayman Islands Monetary Authority is fixed at
15、 CI$1.00 per US$1.20.Thus,the rate ofexchange as of December 31,2022 for conversion of Cayman Islands dollars into Canadian dollars was Cdn$1.6253per CI$1.00(December 31,2021:Cdn$1.5214).All amounts are stated in United States dollars,unless otherwise noted.S Sharhare e PerformancPerformance e The f
16、ollowing chart compares the five-year cumulative total returns between Cdn$100.00 and US$100.00 invested in CUCs Class A Ordinary Shares and the S&P/TSX Composite Index-Utilities and S&P/TSX Composite Index.Information reflected in this Highlights section should be read in conjunction with the Manag
17、ements Discussion and Analysis for the year ended December 31,2022 and its associated cautions beginning on page 9 and the Annual Consolidated Financial Statements for the year ended December 31,2022.All dollar amounts in this Annual Report are stated in United States dollars unless otherwise indica
18、ted.Caribbean Utilities Company,Ltd.2022 Annual Report 4 Letter to Fellow Shareholders It is our pleasure to report on the financial performance and operational progress of Caribbean Utilities Company,Ltd.(“CUC”or the“Company”)for the year ended December 31,2022(“Fiscal 2022”).Some of the highlights
19、 of the year include improvements in safety and reliability performance,a 9%increase in earnings per Class A ordinary shares to$0.86,and a 2%increase in kWh sales.We are very proud that during Fiscal 2022,the CUC team was able to deliver a high standard of service to our customers,while ensuring the
20、 health and safety of our employees.F Financial Performance inancial Performance Operating income for Fiscal 2022 totalled$32.1 million,a$1.9 million or 6%increase from operating income of$30.2 million for the year ended December 31,2021(“Fiscal 2021”).This increase is primarily attributable to a 2%
21、increase in kWh sales and a 5.4%base rate increase effective June 1,2022.These factors were partially offset by higher general and administration,consumer services and maintenance costs.Net earnings for Fiscal 2022 were$33.2 million,a$2.9 million or 9%increase from net earnings of$30.3 million for F
22、iscal 2021.This increase is primarily attributable to higher operating income and slightly lower finance charges.After the adjustment for dividends on the preference shares of the Company,earnings on Class A Ordinary Shares for Fiscal 2022 were$32.2 million,or$0.86 per Class A Ordinary Share,as comp
23、ared to$29.3 million,or$0.79 per Class A Ordinary Share,for Fiscal 2021.The Company calculates earnings per share on the weighted average number of Class A Ordinary Shares outstanding.The weighted average number of Class A Ordinary Shares outstanding were 37,481,959 and 37,199,456 for the years ende
24、d December 31,2022 and December 31,2021,respectively.H Health and Safety ealth and Safety The health and safety of all of our employees,contractors,and members of the public remained paramount to the Company throughout 2022.The members of the Emergency Preparedness Committee and the Environmental He
25、alth and Safety Department were engaged in implementing the Companys emergency response plans for natural disasters including hurricanes and the resurgence of community spread of COVID-19.The Companys Return to Work Committee ensured staff were kept aware of protocols that were put in place to reduc
26、e the spread of the virus within the workplace.Mental health was at the forefront in 2022.Staff were provided with training on techniques to manage stress and provided outlets for counseling.The Company continued to inform the public on ways to remain safe around electrical assets,and resumed the an
27、nual training of First Responders to ensure that they know what to do when arriving on the scene involving energized lines.In 2022,the Company completed its scheduled proactive safety plan.During the year,the Company received verification that its Occupational Health&Safety Management System met the
28、 requirements of the International Organization for Standardization(“ISO”)on safety standards(ISO 45001:2018).Health and safety training continued with the Fleet Defense driver safety programme,energy control training,MoveSafe ergonomic training,and public safety awareness communications.The Company
29、s all injury frequency rate for 2022 was 1.8,consistent with the prior year,and represents the number of incidents per 200,000 hours worked.J.F Richard Hew President&Chief Executive Officer Sheree L.Ebanks Chairperson of the Board of Directors Caribbean Utilities Company,Ltd.2022 Annual Report 5 Env
30、ironment,Social and Governance(“ESG”)Environment,Social and Governance(“ESG”)In September 2022,CUC released its first Sustainability Report.This report facilitates the effective communication of the Companys programmes that supports CUCs commitment to the high standards in ESG initiatives.The report
31、 can be accessed via the Companys website at:www.cuc-.The Companys Environmental Management System(“EMS”)is registered to the ISO environmental standard(ISO 14001:2015)which requires that an external audit of the system be conducted on an annual basis.During 2022,the surveillance audit identified no
32、 areas of nonconformances.As part of the EMS,an internal audit of the system is also required which was successfully conducted in 2022.The Company continued to focus its efforts on reducing greenhouse gas emissions through many initiatives including:the continued high fuel efficiency performance of
33、its modern power generation fleet at 18.68 kWh per imperial gallon in 2022,the utilization of a waste heat recovery system and steam turbine producing electricity using waste heat,the conversion of 84%of all street lighting to LEDs and the purchase of renewable energy from the Bodden Town Solar 1,Lt
34、d.s 5 megawatt(“MW”)solar farm,Customer Owned Renewable Energy(“CORE”)power generators and Distributed Energy Resources(“DER”).Reliability and Customer Service Reliability and Customer Service 2022 saw the continuation of progressing key aspects of the Customer Service Plan which is strategically al
35、igned to meet the challenges presented by the pandemic.The projects in the plan are aimed at enhancing the customer experience for digital and remote services and include the implementation of a Customer Relationship Management system which was completed in 2022.While the Cayman Islands avoided inst
36、ances of community transmission throughout most of 2022,focus remained on accelerating those programmes and projects that would be able to deliver improved customer experiences and service provision even in the event of renewed public health restrictions and measures.Due to the increase in fuel cost
37、s during the year,the Company provided a fuel relief programme,as approved by the Cayman Islands Utility and Regulation and Competition Office(“OfReg”),to all customers to reduce the impact of fuel costs on consumers electricity bills.The programme capped the amount of the fuel factor paid by all cu
38、stomers at$0.24/kWh for consumption effective October 1,2022 through December 31,2022 for future recovery.Along with the Cayman Islands Government(“CIG”)relief programme applicable to eligible residential customers,CUCs relief programme proved beneficial to mitigate the impact of the high fuel facto
39、r rate particularly for commercial customers.The impact of rising energy bills resulting from higher fuel costs was an evident trend in the Companys Customer Satisfaction surveys completed in May and November 2022.General satisfaction levels for customers increased from 72%in the November 2021 surve
40、y to 75%in May 2022 and 73%in November 2022.Customers expressed concerns in relation to prices but conversely also expressed appreciation for the efforts by the Company and the CIG to stabilise the impact of fuel costs on electricity consumption via the two fuel relief programmes.While customers wer
41、e concerned regarding rising fuel prices,there was positive feedback regarding the Companys reliability in relation to electricity supply and the Companys response to outages.The 2022 hurricane season led to some unavoidable instances where there were interruptions of service,however,the Company res
42、ponded well and the customers,with premises intact,did not experience loss of electricity service for extended periods.The Company has continued the process of incremental deployment of new tools,web-forms,and automations to efficiently manage account administration,payment options,communication tra
43、cking and management,and other activities to meet the modernized service provisions demanded by our customers.The focus of the customer service projects in 2022 related to assisting customers with managing electricity consumption,especially during the hot summer months.Caribbean Utilities Company,Lt
44、d.2022 Annual Report6 The Company continued to work on its five-year Reliability 2.0 programme aimed at providing customers with a maximum of two outage hours per average customer per year consistent with North American reliability standards.Within this programme,a number of initiatives were complet
45、ed this year including the vegetation management programme which encourages property owners to plant trees away from power lines,upgrades to generating,transmission and distribution systems and processes,modernisation of the grid and developing of customer communication systems within the control ce
46、ntre.As a result of the Reliability 2.0 programme and other ongoing Company programmes,the Company was able to achieve an average outage duration time of 2.1 hours per customer in 2022 as compared to 2.3 hours in 2021,and down from 6.0 hours in 2018.C Capitaapital l ProjectProjects s 2022 saw the co
47、mpletion and significant progress of several major capital projects.Two new 13 kilovolt(“kV”)feeders were completed and put into service.These feeders will provide electricity and improved reliability for approximately 13,000 residential customers in the Prospect and Newlands areas.The final phase o
48、f the control,automation and protection system upgrade at Hydesville Substation was completed in the third quarter.The project involved the replacement of an outdated system with a more advanced system that provides both the Transmission and Distribution network with improved security and service re
49、liability.Approximately 10 MW of additional generation capacity is being added to the grid.In the third quarter,a 4.6 MW Gas Turbinewas commissioned and is supplying power to the grid,while 5 MW of temporary rental generation is currently being commissioned.The additional generation capacity will pr
50、ovide a reserve margin adequate to ensure acceptable levels of reliable service.The new OSI SCADA system provides additional functionality such as Automation,Outage Management and Demand Management among others.It positions the Company to have greater ability to respond to increasing demand for dist
51、ributed resources such as solar power.The first phase of the SCADA was completed in the third quarter and the second phase is in an advanced stage of completion.The pilot project of distribution automation switches has been completed.This project provides improved efficiency and reliability to the d
52、istribution network.The refurbishment of the mobile substation is another major achievement.It provides the options for the Company to plan and execute major upgrades and outage management without negative effects on customers.The CUC Electric Vehicle Charging Networkis being rolled out with 5 stati
53、ons installed during 2022 and a target of an additional 40 stations to be installed within the next year.The Company is focusing on higher rate charging stations with targeted locations of where people live and work.The completion of the North Sound 69kV busbar differential project was a significant
54、 success.The project aims to add industry standard bus differential protection to CUCs largest and most vital substation,the North Sound 69kV.The result means a more reliable and resilient power system.System Average Interruption Duration Index(“SAIDI”)-Indicates the total duration of sustained inte
55、rruption for the average customer during a predefined period of timeCaribbean Utilities Company,Ltd.2022 Annual Report 7 During 2022,the Company engaged and contracted industry experts for its upcoming major capital projects.In September 2022,the Company signed an Agreement with the technology group
56、 Wrtsil for the supply of two 10 MW energy storage systems at the Hydesville and Prospect Substations expected to be commissioned in 2024.In November 2022,the Company also signed an agreement with MAN Energy Solutions SE for the life-cycle upgrades of five existing engines at the North Sound Road pl
57、ant,totalling 64 MW of capacity.The upgrade will extend the useful life of these engines while increasing the fuel efficiency.It will also prepare the engines for conversion to run on natural gas.The Company signed an agreement with Hitachi Energy for the installation of a Geographic Information Sys
58、tem(“GIS”)indoor switchgear at the Frank Sound Substation,in place of the existing temporary arrangement.This will enhance the reliability of the eastern loop 69kV transmission loop and facilitate accelerating load growth and future integration of renewable energy sources in East End of Grand Cayman
59、.The new gear is expected to be in operation in 2024.H Human Resources and Training uman Resources and Training At December 31,2022,the number of CUCs full-time employees was 253,up by 6%from December 31,2021.The Company maintains a stable employee base of which approximately 82%are Caymanians.The r
60、emaining employees represent 18 other countries from across the globe.In 2022,CUC continued to expand its commitment to a respectful and inclusive work place by renewing the local Gender Equality Cayman Pledge.The Company also remained involved with the Fortis Inc.Diversity,Equity and Inclusion init
61、iatives.CUC continues to attract women to its workforce and has seen an increase in the number of women who have joined the Company in technical roles.Overall,approximately 21%of the workforce is female as of the yearend.The Company developed several initiatives geared towards supporting our employe
62、es,including flexible and remote work arrangements.Leadership development continued to be a key area of focus.During the year,coaching and support sessions to the management team were conducted which focused on motivating and engaging employees.The Company continues to value its employees and provid
63、e training and development opportunities.Employees remained committed to formal learning and development.Over 9,245 hours were devoted to employee training in 2022 and additional time was dedicated to informal training,various workshops and employee coaching.There was a continued focus on safety,enh
64、ancing performance,skills development,and recertification.The National Center for Construction Education and Research curriculum continued to be offered at CUC for various technical programmes in partnership with Inspire Cayman Training Centre.The Company underwent a reorganization in 2022 to best p
65、osition the Company to achieve its long-term strategic goals.This process resulted in the introduction of new Director roles to the Senior Management Team.This also opened opportunities for growth and internal promotions.As the Company places a high priority on teamwork,the reorganization is intende
66、d to enhance adaptability and flexibility for growth opportunities,career development,progression and employee retention to ensure reliability and resilience.Artists rendering of the Hydesville Substation in West Bay with the 10 MW energy storage system.Caribbean Utilities Company,Ltd.2022 Annual Re
67、port 8 In May 2022,the Company celebrated 29 employees who received long service awards for having careers spanning from 10 to 40 years.Together,they have given the Company 615 years of service.The Company bid farewell to Mr.Clinton Stewartson and Mrs.Marlene Galbraith who retired after serving the
68、Company for 40 years.Rewards and recognition efforts continued throughout the year,with employees receiving peer nominations,amongst other Company-wide recognition efforts.In September,the Companys Rewards and Recognition Committee launched the Rewards and Recognition Booklet which contains all oppo
69、rtunities for awards and its relevant criteria.The year concluded with the annual awards recognizing a number of employees.Employees received outstanding awards ranging from Excellence in Safety,to Wellness,to Employee of the Year:Randy Mellaneo(Employee of the Year);Troy Powery(Supervisor of the Ye
70、ar);Brandon Cadle(Excellence in Safety);Dac Moore,James Ebanks,Andrew Hafer-Greene,Max Garcia and Ignatius Gouveia were awarded the(Jeffrey Broderick Bright Spark Award);Francis Zapanta(Individual)and Production Maintenance(Department)-Otis Jackson Golden Wrench Award;and Shane Cato(Individual)and S
71、ystems Operations(Department)Pedro Echenique Golden Bucket Award.This year a total of 17 employees qualified for the Wellness Champions Award in the Bronze,Silver and Gold categories.With the revamp of our rewards and recognition programme,the Unsung Hero Award and Living by our Values Awards were i
72、ntroduced.Jonathan Key was annouced as the 2022 Unsung Hero.We are grateful to our staff who have worked hard to achieve these positive results for 2022.CUC thrives from the significant efforts,innovation,and commitment they have made to the Company over these many years.Community Involvement Commun
73、ity Involvement The Community Involvement Programme continues to provide the opportunity for a wide cross section of the Companys employees to give of their time and talent to the Cayman community through volunteerism.As the country continues to recover from the impact of the COVID-19 pandemic,a num
74、ber of inperson events have resumed.At the end of December 2022,employees had volunteered 919 hours participating in some of the Companys Community Involvement projects.This is an increase of 221 hours from the 698 hours volunteered in 2021.Some of the projects and events that volunteers took part i
75、ncluded Meals on Wheels,activities with the Lighthouse School,Earth Day Cleanups and support for the Sunrise Adult Training Centre.The Company continues to sponsor a Mangrove Environmental Education Programme,which exposes primary school children to Grand Caymans marine and wetlands environment and
76、its importance.CUC remains committed to the ongoing development of the community in which we live and work.Summary Summary The Cayman Islands economy has seen strong growth during 2022 supported by a rebound in tourism following the phased reopening of international borders from November 2021 and th
77、e gradual lifting of COVID-19 restrictions in 2022.Despite the challenges with rising inflationary pressures and fuel cost,the economy proved to be resilient with new customers and developments in the construction sector driving the Companys 2%kWh sales growth and a new record system peak load.Durin
78、g the past two years,the Company has invested over$100 million in infrastructure to ensure the delivery of safe,reliable,affordable and sustainable electricity to our customers during the pandemic,and to meet increased demand as the economy recovers.The achievements during Fiscal 2022 would not be p
79、ossible without the hard work,commitment and dedication of our employees and we are grateful to them for their loyalty to the Company.The Board of Directors also continue to provide guidance and support and we thank them for their ongoing contributions as we pursue our vision of“Empowering Cayman to
80、 be a Global Leader.”Signed“Sheree L.Ebanks”Signed“JF Richard Hew”Sheree L.Ebanks J.F.Richard Hew Chairperson of the Board of Directors President&Chief Executive Officer February 10,2023 Caribbean Utilities Company,Ltd.2022 Annual Report 9 Managements Discussion and Analysis The following management
81、s discussion and analysis(“MD&A”)should be read in conjunction with the Caribbean Utilities Company,Ltd.(“CUC”or the“Company”)consolidated financial statements and related notes for the year ended December 31,2022(the“2022 Financial Statements”).The material has been prepared in accordance with Cana
82、dian Securities Administrators National Instrument 51-102-Continuous Disclosure Obligations(“NI 51-102”)relating to the MD&A and is available on SEDAR at together with the Companys annual information form for the year ended December 31,2022,which contains additional information relating to the Compa
83、ny.The accounting practices,which are disclosed in the notes to the 2022 Financial Statements,result in regulatory assets and liabilities,which would not occur in the absence of rate regulation.In the absence of rate regulation,the amount and timing of recovery or refund by the Company of the costs
84、of providing services,including a fair return on rate base assets,from customers through appropriate billing rates would not be subject to regulatory approval.Certain statements in this MD&A,other than statements of historical fact,are forward-looking statements concerning anticipated future events,
85、results,circumstances,performance or expectations with respect to the Company and its operations,including its strategy,financial performance and condition.Forward-looking statements include statements that are predictive in nature,depend upon future events or conditions,or include words such as“exp
86、ects”,“anticipates”,“plans”,“believes”,“estimates”,“intends”,“targets”,“projects”,“forecasts”,“schedules”,or negative versions thereof and other similar expressions,or future or conditional verbs such as“may”,“will”,“should”,“would”and“could”.Forward-looking statements are based on underlying assump
87、tions and managements beliefs,estimates and opinions,and are subject to inherent risks and uncertainties surrounding future expectations generally that may cause actual results to vary from plans,targets and estimates.Some of the important risks and uncertainties that could affect forward-looking st
88、atements are described in the MD&A in the sections labelled“Business Risks”,“Capital Resources”and“Corporate and Regulatory Overview”and include but are not limited to operational,general economic,market and business conditions,regulatory developments and weather.CUC cautions readers that actual res
89、ults may vary significantly from those expected should certain risks or uncertainties materialise,or should underlying assumptions prove incorrect.Forward-looking statements are provided for the purpose of providing information about managements current expectations and plans relating to the future.
90、Readers are cautioned that such information may not be appropriate for other purposes.The Company disclaims any intention or obligation to update or revise any forward-looking statements,whether as a result of new information,future events or otherwise except as required by law.Financial information
91、 is presented in United States dollars unless otherwise specified.The 2022 Financial Statements and MD&A in this Annual Report were approved by the Audit Committee and the Board of Directors.On May,31,2022,the Ontario Securities Commission issued a relief order which permits the Company to continue
92、to prepare its financial statements in accordance with U.S.GAAP.The relief extends until the earliest of:(i)January 1,2027;(ii)the first day of the financial year that commences after the Company ceases to have rate-regulated activities;or(iii)the first day of the Companys financial year that commen
93、ces on or following the later of(a)the effective date prescribed by the International Accounting Standards Board(the“IASB”)for the mandatory application of a standard within IFRS specific to entities with activities subject to rate regulation(the“Mandatory Rate-regulated Standard”)and(b)two years af
94、ter the IASB publishes a final version of the Mandatory Rate-regulated Standard.The Company is currently reviewing the implications of this order and analyzing alternate options to continue to report under US GAAP.February 10,2023 Letitia T.Lawrence Vice President Finance,Corporate Services&Chief Fi
95、nancial Officer Caribbean Utilities Company,Ltd.2022 Annual Report 10 F Financial and Operational Highlights inancial and Operational Highlights ($thousands,except Basic Earnings,Dividends Paid and where otherwise indicated)Year Ended Year Ended December 31,20December 31,202 22 2 Year Ended Year End
96、ed December 31,20December 31,202 21 1 ChangeChange%Change%Change Electricity Sales Revenues 101,551101,551 97,520 4,031 4%Fuel Factor 159,856159,856 95,208 64,648 68%Renewables 5,9295,929 5,750 179 3%Total Operating Revenues 267,336267,336 198,478 68,858 35%Power Generation1 1 170,82170,821 105,815
97、65,006 61%Other Expenses 64,44764,447 62,440 2,007 3%Total Operating Expenses 235,268235,268 168,255 67,013 40%Net Operating Income 32,06832,068 30,223 1,845 6%Net Earnings for the Year 33,33,1 17979 30,319 2,860 9%Cash Flow related to Operating Activities 56,18856,188 62,009(5,821)-9%Per Class A Or
98、dinary Share:Basic Earnings 0.860.86 0.79 0.07 9%Dividends Paid 0.7000.700 0.700-Total Customers 33,11933,119 32,185 934 3%Total Full-Time Employees 253253 239 14 6%Customers per Employee(#)131131 135(4)-3%System Availability(%)99.9799.97 99.97-Peak Load Gross(MW)113.6113.6 111.2 2.4 2%Millions of k
99、Wh:Net Generation 680.4680.4 662.0 18.4 3%Renewable Energy Generation 21.921.9 21.3 0.6 3%Total Energy Supplied 698.7698.7 679.3 19.4 3%Kilowatt-Hour Sales 674.1674.1 660.5 13.6 2%Sales per Employee 2.662.66 2.76(0.1)-4%Corporate and Regulatory Overview Corporate and Regulatory Overview The principa
100、l 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 exclusive Transmission&Distribution(“T&D”)Licence and a 25-year non-exclusive Generation Licence(the“Licences”)granted by the Cayman Islands Governmen
101、t(the“Government”,“CIG”),which expire in April 2028 and November 2039,respectively.The Company is regulated by the Cayman Islands Utility Regulation and Competition Office(“OfReg”),which has the overall responsibility of regulating the electricity,information and communications technology,and the pe
102、troleum industries in the Cayman Islands.The OfReg assesses CUCs performance against the performance standard expectations in accordance with the Utility Regulation and Competition Office Act(2021).Performance standards provide a balanced framework of potential penalties or rewards compared to histo
103、rical performance in the areas of planning,reliability,operating and overall performance.Standards include“zones of acceptability”where no penalties or rewards would apply.A license fee of$2.9 million per annum and a regulatory fee of$1.4 million per annum are payable to the Cayman Islands Governmen
104、t in quarterly installments.Both fees apply only to customer billings with consumption over 1,000 kWh per month as a pass-through charge rate.1 All amounts from Fuel Factor and Renewables revenues are included within the Power Generation expense as they are passed through to customers without mark-u
105、p as a per kWh charge.Caribbean Utilities Company,Ltd.2022 Annual Report 11 C Customer Rates ustomer Rates The Licenses contain the provision for a rate cap and adjustment mechanism(“RCAM”)based on published consumer price indices.CUCs return on rate base(“RORB”)for 2021 was 7.00%(2020:6.60%).CUCs R
106、ORB for 2022 is targeted in the 6.25%to 8.25%range(2021:6.00%to 8.00%).CUCs base rates are designed to recover all non-fuel and non-regulatory costs and include per kilowatt-hour(“kWh”)electricity charges and fixed facilities charges.Fuel,lube,and renewables cost charges and regulatory fees are bill
107、ed as separate line items.Base rates are subject to an annual review and adjustment each June through the RCAM.In the event of a natural disaster,as defined in the T&D Licence,the actual increase in base rates will be capped for the year at 60%of the change in the Price Level Index and the differenc
108、e between the calculated rate increase and the actual increase expressed as a percentage,shall be carried over and applied in addition to the normal RCAM adjustment in either of the two following years if the Companys RORB is below the target range.In the event of a disaster,the Company would also w
109、rite-off destroyed assets over the remaining life of the asset that existed at the time of destruction.Z Factor rate changes will be required for insurance deductibles and other extraordinary expenses.The Z Factor is the amount,expressed in cents per kWh,approved by the OfReg to recover the costs of
110、 items deemed to be outside of the constraints of the RCAM.The OfReg assesses CUCs performance against the performance standard expectations set out in the ERA(Standard of Performance)Rules 2012.Performance standards provide a balanced framework of potential penalties or rewards compared to historic
111、al performance in the areas of planning,reliability,operating and overall performance.Standards include“zones of acceptability”where no penalties or rewards would apply.All fuel,lubricating oil,and renewables costs are passed through to customers without mark-up as a per kWh charge.D Deferral Mechan
112、ism eferral Mechanism As part of the CUCs COVID-19 Customer Relief Programme,OfReg approved the deferral of the 6.6%rate base increase effective June 1,2020 to January 1,2021.Total deferred revenue recorded as regulatory asset amounted to$3.5 million which was recovered within two years through futu
113、re rates since January 1,2021.The amount was fully recovered as at December 31,2022.The Company was also granted approval by OfReg to recover various COVID-19 related expenses,including potential credit losses resulting from suspension of disconnections during the pandemic.A total of$0.7 million was
114、 recorded as a regulatory asset and was recovered within two years through future rates since January 1,2021.The amount was fully recovered as at December 31,2022.In April 2022,the Company submitted its annual rate adjustment to OfReg for review and approval.The required rate increase as confirmed b
115、y OfReg was 5.4%,with an effective date of June 1,2022.This required increase was a result of the applicable RORB and United States(“US”)and Cayman Islands consumer price indices,adjusted to exclude food and fuel.Due to the economic condition and rising fuel prices,OfReg approved the Companys propos
116、al to defer billing of the required rate increase until January 1,2023.For the period June 1,2022 to December 31,2022,the Company tracked the difference between billed revenues and revenues that would have been billed from the required rate increase as deferred revenue.The amount recorded as regulat
117、ory asset for the year ended December 31,2022 was$2.8 million and will be recovered within two years through future rates from the effective date of January 1,2023.In October 2022,OfReg approved the proposed CUC Fuel Relief Programme applicable to all customers to reduce the fuel cost spike.The Prog
118、ramme capped the amount of the fuel factor paid by customers at$0.24/kWh for consumption effective October 1,2022 through December 31,2022.During the period of the Programme,CUC recorded the excess fuel factor as a Regulatory Asset for a 12-month recovery estimated at$0.0075 per kWh.The amount recor
119、ded as a regulatory asset for the year ended December 31,2022 was$6.3 million and will be recovered within one year through future rates from the effective date of January 1,2023.Caribbean Utilities Company,Ltd.2022 Annual Report12 D DataLinkataLink,LtdLtd.CUCs wholly-owned subsidiary,DataLink,Ltd.(
120、“DataLink”),was incorporated under the Companies Act of the Cayman Islands and commenced operations with the granting of its licence to provide fibre optic infrastructure and other information and communication technology(“ICT”)services to the ICT industry by the former ICTA,whose regulatory authori
121、ty was assumed by the OfReg,on March 28,2012.DataLink is subject to regulation by the OfReg in accordance with the terms and conditions of its licence,which has a term of 15 years,expiring on March 27,2027.CUC and DataLink have entered into three regulator-approved agreements:1.The Management and Ma
122、intenance agreement;2.The Pole Attachment agreement;and3.The Fibre Optic agreement.ConsolidatioConsolidation n AccountinAccounting g PolicPolicy y The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary DataLink.All intercompany balances and transact
123、ions have been eliminated on consolidation.ResultResults s o of f OperationOperations s EarningEarnings s Operating income for the year ended December 31,2022(“Fiscal 2022”)totalled$32.1 million,a$1.9 million increase from operating income of$30.2 million for the year ended December 31,2021(“Fiscal
124、2021”).This increase is primarily attributable to a 2%increase in kWh sales and a 5.4%base rate increase effective June 1,2022.These factors were partially offset by higher general and administration,consumer services and maintenance costs.Net earnings for Fiscal 2022 were$33.2 million,a$2.9 million
125、 increase from net earnings of$30.3 million for Fiscal 2021.This increase is primarily attributable to higher operating and other income,and lower finance charges.After the adjustment for dividends on the preference shares of the Company,earnings on Class A Ordinary Shares for Fiscal 2022 were$32.2
126、million,or$0.86 per Class A Ordinary Share,as compared to$29.3 million,or$0.79 per Class A Ordinary Share,for Fiscal 2021.The Company calculates earnings per share on the weighted average number of Class A Ordinary Shares outstanding.The weighted average number of Class A Ordinary Shares outstanding
127、 were 37,481,959 and 37,199,456 for the years ended December 31,2022 and December 31,2021,respectively.S SalesalesSales in kWh for Fiscal 2022 were 674.1 million kWh,anincrease of 13.6 million kWh or 2%compared to 660.5 million kWh for Fiscal 2021.The increase was driven by the3%growth in overall cu
128、stomer numbers in Fiscal 2022compared to Fiscal 2021 and the 2%increase in the average kWh consumption of commercial customers,partially offset by the 2%decrease in the average kWh of residential customers.The average monthly temperature for 2022 was 82.9 degrees Fahrenheit when compared to 83.1 deg
129、rees Fahrenheit in 2021.The average rainfall for 2022 was 4.6 inches as compared to 3.7 inches in 2021.The new record peak load of 113.6 MW was experienced on September 11,2022.Total customers as at December 31,2022 were 33,119,an increase of 934 or 3%compared to 32,185 customers as at December 31,2
130、021.20222021202020192018Commercial305294283320308Residential3643623573423140100200300400500600700800Residential and Commercial SalesSales in million kWhCaribbean Utilities Company,Ltd.2022 Annual Report 13 O Operating Revenuesperating Revenues Operating revenues for Fiscal 2022 totalled$267.3 millio
131、n,an increase of$68.8 million from$198.5 million for Fiscal 2021.This increase in operating revenues was due to higher fuel factor revenues and higher electricity sales revenues.Electricity sales revenues increased by$4.1 million for Fiscal 2022 to$101.6 million when compared to electricity sales re
132、venues of$97.5 million for Fiscal 2021.This increase is attributable to higher electricity sales revenues primarily driven by 2%kWh sales growth and the 5.4%base rate increase effective June 1,2022.Fuel factor revenues for Fiscal 2022 totalled$160.0 million,a$64.8 million increase from the$95.2 mill
133、ion in fuel factor revenues for Fiscal 2021.Fuel factor revenues for Fiscal 2022 increased when compared to Fiscal 2021 due to an increase in the price of fuel.The average Fuel Cost Charge rate charged to consumers for Fiscal 2022 was$0.24 per kWh,compared to the Fuel Cost Charge rate of$0.15 per kW
134、h for Fiscal 2021.The renewables revenues are a combination of charges from the Customer Owned Renewable Energy(“CORE”)programme,Distributed Energy Resources(“DER”)and Bodden Town Solar 1,Ltd.,which are passed-through to consumers on a two-month lag basis with no mark-up.The Company has a Power Purc
135、hase Agreement(“PPA”)with Bodden Town Solar 1,Ltd.for a 25-year term.O Operating Expenses perating Expenses Total operating expenses for Fiscal 2022 increased by$67.0 million to$235.3 million from$168.3 million for Fiscal 2021.The main contributing factors to the increase in operating expenses were
136、increase in fuel prices,general and administration,consumer services and maintenance costs partially offset by decrease in transmission and distribution costs.Sales and Customer HighlightsSales and Customer Highlights Y Ye ea ar r E En nd de ed d December 3December 31 1,2 20 02 22 2 Y Ye ea ar r E E
137、n nd de ed d December 3December 31 1,2 20 02 21 1 ChangeChange%Customers Customers (fully stated,not in thousands)Residential 28,42928,429 27,552 3%General Commercial 4 4,5 58 89 9 4,535 1%Large Commercial 1 10 01 1 98 3%Total Customers 33,11933,119 32,185 3%S Sa al le es s (in thousands kWh)Residen
138、tial 364,114364,114 361,605 1%General Commercial 1 14 44 4,8 81 16 6 142,038 2%Large Commercial 1 16 60 0,4 46 61 1 151,807 6%Other 4 4,7 73 33 3 5,019-6%Total Sales 6 67 74 4,1 12 24 4 660,469 2%A Av ve er ra ag ge e MMo on nt th hl ly y C Co on ns su um mp pt ti io on n Per Customer(kWh)Per Custom
139、er(kWh)Residential 1 1,0 08 84 4 1,107-2%General Commercial 2 2,6 67 78 8 2,641 1%Large Commercial 1 13 38 8,6 66 63 3 135,296 2%R Re ev ve en nu ue es s (in thousands of$)Residential 5 54 4,3 34 46 6 52,169 4%General Commercial 2 25 5,0 00 04 4 23,934 4%Large Commercial 21,33421,334 20,602 4%Other(
140、street lights etc.)8 86 67 7 815 6%Fuel Factor 1 15 59 9,8 85 56 6 95,208 68%Renewables 5 5,9 92 29 9 5,750 3%Total Operating Revenues*2 26 67 7,3 33 36 6 198,478 35%*Total CUC customers and revenue only Caribbean Utilities Company,Ltd.2022 Annual Report 14 The primary reasons for the changes in the
141、 Companys operating expenses for the year ended December 31,2021 and December 31,2022 are as follows:C Changes in Operating Expenseshanges in Operating Expenses ($in thousands)I Itemtem Y Year Ended ear Ended D De ecember 3cember 31 1,2 20 02 22 2 Year Ended Year Ended D December 3ecember 31 1,2 20
142、02 21 1 ChangeChange%Change%Change Explanation Explanation Power Generation(Note A)170,821 105,815 65,006 61%This increase was primarily due to an increase in fuel costs and kWh sales growth.Depreciation of Property,Plant and Equipment(“PP&E”)38,018 38,124(106)-The decrease in depreciation expenses
143、was due to the OfRegs approval to extend the useful lives of four of the Companys generating units in 2021,partially offset by capital projects completed during the year.General and Administration(“G&A”)10,446 9,147 1,299 14%This increase was mainly due to higher compensation cost,insurance premiums
144、 and legal fees.These items were partially offset by higher General Expenses Capitalized.Consumer Services(Note B)4,621 3,271 1,350 41%The increase was due to higher allowance for credit losses in 2022 when compared to 2021.Transmission and Distribution 4,291 5,093(802)-16%The decrease in T&D expens
145、es was due to capitalization of vegetation management costs as approved by OfReg.Net Other Income 1,111 96 1,015 1,057%The increase in the net other income for the year was due to an increase in foreign exchange gain and increase in the revenue of the Companys wholly owned subsidiary,DataLink.Note A
146、.Power Generation Note A.Power Generation Power generation expenses were as follows:Power GenerationPower Generation ($thousands)Fuel,Lubricating Oil and Renewables costs stated net of deferred charges Year Ended Year Ended December 31,20December 31,202 22 2 Year Ended Year Ended December 31,20Decem
147、ber 31,202 21 1 ChangeChange%Change%Change Fuel Costs(net of deferred fuel costs)157,945157,945 93,900 64,045 68%Lubricating Oil Costs(net of deferred lubricating oil costs)1,9111,911 1,308 603 46%Renewables Costs(net of deferred renewables costs)5,9295,929 5,750 179 3%Temporary Generation Costs 7 7
148、 -7-Other Generation Expenses 5,0295,029 4,857 172 4%Total Power Generation expensesTotal Power Generation expenses 170,821170,821 105,815 65,006 61%The average fuel price per kWh for 2022 increased in comparison to the prior year driven by inflation and the conflict in Ukraine.The Companys average
149、price per imperial gallon(“IG”)of fuel for the year ended December 31,2022 increased by 61%to$4.67 in comparison to$2.90 for the twelve months ended December 31,2021.The Companys average price per IG of lubricating oil for the twelve months ended December 31,2022,increased by 34%to$13.78 when compar
150、ed to$10.30 for the twelve months ended December 31,2021.Caribbean Utilities Company,Ltd.2022 Annual Report15 Total energy supplied to the grid for Fiscal 2022 was 698.7 million kWh,a 3%increase when compared to 679.3 million kWh for Fiscal 2021.Total energy supplied is the net amount of energy avai
151、lable to be transmitted and distributed for consumer use,including energy provided by renewable resources such as the CORE and DER programmes,and the Bodden Town Solar 1,Ltd.s Solar Farm.Net fuel efficiency for Fiscal 2022 of 18.68 kWh per IG decreased when compared to net fuel efficiency for Fiscal
152、 2021 of 18.77 kWh per IG.The fuel,lubricating oil and renewables costs are deferred for a period of two months.The deferrals are recorded in the Fuel Tracker Account(see Note 7 of the Notes to the Annual Consolidated Financial Statements for further details)and will be recovered from consumers.In M
153、arch 2011,the OfReg approved the Fuel Price Volatility Management Programme.The objective of the programme is to reduce the impact of volatility in the Fuel Cost Charge rate paid by the Companys customers for the fuel that the Company must purchase in order to provide electricity.A contract initiate
154、d in 2022 utilises call options and call spreads to promote transparency in pricing.The monthly hedging costs and returns are also included within the Fuel Tracker Account.N Notote e B B.CustomeCustomer r ServicService e In accordance with its Allowance for Credit Losses policy,the Company maintains
155、 an accumulated provision for uncollectible customer accounts receivable that is estimated based on known accounts,historical experience and other currently availableinformation,including the economic environment.TradTrade e anand d OtheOther r AccountAccounts s ReceivableReceivable ($thousands)A As
156、 s a at t DecembeDecember r 3131,2022022 2 As at December 31,2021 Current19,47319,473 9,957Past due 31-60 days1,0261,026 827Past due 61-90 days480480 318Past due over 90 days2,8972,897 2,217TotaTotal l AccountAccounts s ReceivableReceivable 23,87623,876 13,319Less:Allowance for Credit Losses(2,(2,2
157、24141)(1,976)Less:Consumer Deposits(12,698)(12,698)(11,724)TradTrade e ReceivableReceivables s lesless s AllowancAllowance e fofor r CrediCredit t LosseLosses s anand d ConsumeConsumer r DepositsDeposits 8,9378,937(381)Trade receivables,less allowances for credit losses,and consumer deposits as at D
158、ecember 31,2022 were$8.9 million,an increase of$9.3 million when compared to($0.4)million as at December 31,2021.This increase was related to an increase in current customer receivables partially offset by an increase in allowance for credit losses and consumer deposits.The increase in the current c
159、ustomer receivables was primarily driven by the 5.4%increase in base rate and the 40%increase in fuel cost charge between December 31,2021 and December 31,2022.3.38 3.38 3.81 4.17 4.83 5.32 5.30 5.42 5.10 4.95 5.11 5.19 2.23 2.46 2.56 2.89 2.82 2.94 3.02 3.05 3.01 3.03 3.33 3.51 -1.00 2.00 3.00 4.00
160、 5.00 6.00JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DECAverage Fuel Price(In USD Per IG)20222021Caribbean Utilities Company,Ltd.2022 Annual Report 16 O Other Income and Expensesther Income and Expenses Other income and expenses were as follows:Other Income&Expenses Other Income&Expenses ($thousand
161、s)Year Ended Year Ended December 31,20December 31,202 22 2 Year Ended Year Ended December 31,20December 31,202 21 1 ChangeChange%Change%Change Total Interest Costs(13,55(13,553 3)(13,137)(416)3%Allowance for Funds Used During Construction(“AFUDC”)8,7788,778 8,329 449 5%Total Finance Charges(4,77(4,7
162、75 5)(4,808)33-1%Foreign Exchange Gain 1,8771,877 1,582 295 19%Other Income 4,0094,009 3,322 687 21%Total Net Other Income Total Net Other Income 1,111,111 1 96 1,015 1,057%Finance charges for Fiscal 2022 totalled$4.8 million,comparable to Fiscal 2021.The T&D Licence allows for the capitalisation of
163、 the finance cost related to capital projects.AFUDC is calculated by multiplying the Companys cost of capital rate by the average work in progress for each month.The Companys cost of capital rate is reviewed annually.During 2022,the cost of capital was 7.25%(2021:7.00%)as agreed with the OfReg in ac
164、cordance with the T&D Licence.The AFUDC amount for Fiscal 2022 totalled$8.8 million,an increase of$0.5 million from$8.3 million for Fiscal 2021.Foreign exchange gains and losses are the result of monetary assets and liabilities denominated in foreign currencies that are translated into United States
165、 dollars at the exchange rate prevailing on the date of the balance sheet.Revenue and expense items denominated in foreign currencies are translated into United States dollars at the exchange rate prevailing on the transaction date.Foreign exchange gains totalled$1.9 million for Fiscal 2022,a$0.3 mi
166、llion increase when compared to$1.6 million for Fiscal 2021.Foreign exchange gains increased due to higher foreign currency purchases.Other income is comprised of income from the third-party customers of DataLink,income from pipeline operations,sale of meter sockets,sale of recyclable materials,perf
167、ormance rewards as part of the T&D Licence and other miscellaneous income.Performance standards as prescribed by the T&D Licence provide a balanced framework of potential penalties or rewards compared to historical performance in the areas of planning,reliability,operating and overall performance.St
168、andards include“zones of acceptability”where no penalties or rewards would apply.Other income totalled$4.0 million for Fiscal 2022,a$0.7 million increase from$3.3 million for Fiscal 2021.Revenues from DataLink for Fiscal 2022 are recorded in other income in the amount of$2.1 million,a$0.7 million in
169、crease from$1.4 million for Fiscal 2021.The EconomyThe Economy The Cayman Islands Economics and Statistics Office(“ESO”)published the 2022 First Quarter Economic Report in September 2022.The report indicated that the Gross Domestic Product(“GDP”)expanded by an estimated annualized rate of 3.8%in the
170、 first three months of 2022.The economic expansion was driven largely by the recovery in tourism and transportation-related sectors.Hotels and restaurants had an estimated growth of 27.8%for the period,while transportation and communication expanded by 14.3%.The financial services sector,the largest
171、 contributor to GDP,had estimated growth of 2.5%,while business activities and administrative services rose by 2.1%.In October 2022,ESO published the Cayman Islands Costumer Price Index(“CPI”)Report for third quarter of 2022.The year-on-year(September 2022/September 2021)inflation rate was at 9.2%wh
172、ich was driven by the 14.2%increase in Housing and Utilities.ESO reported that the Residential Fuel Relief Programme by the Cayman Islands Government has reduced the year-on-year inflation to 7.5%.Caribbean Utilities Company,Ltd.2022 Annual Report 17 Financial services is one of the two main industr
173、ies of the Cayman Islands.The table below itemises trends in some of the key financial sectors:I Indicators for the Financial Services Industryndicators for the Financial Services Industry (for the years ended December 31)2 202022 2 2 202021 1 2 20 02 20 0 2 20 01 19 9 2 20 01 18 8 Bank Licences 94
174、101 110 125 133 Mutual Funds 12,995 12,719 11,312 10,857 10,992 Mutual Fund Administrators 74 75 76 81 88 Registered Companies 119,128 99,327 111,568 109,556 107,309 Captive Insurance Companies 686 686 679 672 730 The tourism sector is the second main pillar of the Cayman Islands economy.Due to the
175、COVID-19 pandemic,the countrys borders were closed to tourism in March 2020.The borders have been reopened in a phased manner since 2021.The Cayman Islands Government launched Phase Five of its reopening plan in January 2022 which allowed more travellers to enter the country.All travel restrictions
176、and COVID-19 protocols were lifted as of December 31,2022 and the country has reopened its borders to tourism.The following table presents statistics for tourist arrivals in the Cayman Islands for the year ending December 31:T Tourist Arrivals to the Cayman Islandsourist Arrivals to the Cayman Islan
177、ds (for the years ended December 31)2 202022 2 2 202021 1 2 20 02 20 0 2 20 01 19 9 2 20 01 18 8 By Air 1 180,62480,624 2,212 121,819 502,739 463,001 By Sea 4 426,29326,293 -538,140 1,831,011 1,921,057 Total 6 606,91706,917 2,212 659,959 2,333,750 2,384,058 All data is sourced from the Cayman Island
178、s Government,Cayman Islands Economics&Statistics Office,Cayman Islands Monetary Authority and Cayman Islands Department of Tourism(www.gov.ky,www.eso.ky,.ky,www.caymanislands.ky).Liquidity and Capital ResourcesLiquidity and Capital Resources The primary sources of liquidity and capital resources are
179、 net funds generated from operations,debt markets,equity issuance,and bank credit facilities.These sources are used primarily to satisfy capital and intangible asset expenditures,service and repay debt,and pay dividends.The following table outlines the summary of cash flow for Fiscal 2022 compared t
180、o Fiscal 2021:Cash FlowsCash Flows ($thousands)Year Ended Year Ended D December 31,ecember 31,20202 22 2 Year Ended Year Ended D December 31,ecember 31,20202 21 1 ChangeChange%Change%Change Beginning Cash 7,367,360 0 45,586(38,226)-84%Cash Provided By/(Used In):Operating Activities 56,156,18 88 8 62
181、,009(5,821)-9%Investing Activities(9(97 7,19,191 1)(63,128)(34,063)54%Financing Activities 41,41,5 59 91 1 (37,107)78,698-212%Ending CashEnding Cash 7,947,948 8 7,360 588 8%Caribbean Utilities Company,Ltd.2022 Annual Report 18 Operating Activities:Cash flow provided by operations,after working capit
182、al adjustments,for Fiscal 2022,was$56.2 million,a decrease of$5.8 million from$62.0 million for Fiscal 2021.This decrease was primarily due to the movement in regulatory deferrals which include recoveries of deferred revenue,accounts receivable and inventory.The items were partially offset by higher
183、 earnings and the movement in accounts payables.Investing Activities:Cash used in investing activities for Fiscal 2022 totalled$97.2 million,an increase of$34.1 million from$63.1 million for Fiscal 2021.This increase was primarily due to higher capital expenditures during Fiscal 2022.Financing Activ
184、ities:Cash provided by financing activities totalled$41.6 million for Fiscal 2022,an increase of$4.5 million when compared to$37.1 million of cash used financing activities for Fiscal 2021.This net increase is mainly due to additional long term debt financing in Q4 2022,partially offset by loan repa
185、yments and dividend payments in 2022.Cash Flow Requirements:The Company expects that operating expenses and interest costs will generally be paid from the Companys operating cash flows,with residual cash flows available for capital expenditures and dividend payments.Borrowings under credit facilitie
186、s may be required from time to time to support seasonal working capital requirements.Cash flows required to complete planned capital expenditures are expected to be financed through a combination of proceeds from operating cash,debt and equity transactions.The Company expects to be able to source th
187、e cash required to fund its 2023 capital expenditure programme(see the“Business Risks”section of this MD&A for details regarding the Companys liquidity risk).Credit FacilitiesCredit Facilities The Company currently has$82.5 million of unsecured credit financing facilities with Scotiabank&Trust(Cayma
188、n)Limited(“Scotia”)and Royal Bank of Canada(“RBC”).The financing facilities are comprised of:ShortShort-Term FinancingTerm Financing ($thousands)($thousands)Credit FacilitiesCredit Facilities($millions)($millions)Provided by Scotia:Provided by Scotia:MasterCard Agreement 500 Operating,Revolving Line
189、 of Credit 10,000 Letter of Credit 13,000 Standby Loan 7,500 Demand Loan Facility-Interim Funding of Capital Expenditures 51,000 TotalTotal 82,00082,000 Provided by RBC:Provided by RBC:Corporate Credit Card Line 500 TotalTotal 82,50082,500 As at December 31,2022,$82.0 million was available under the
190、 Companys credit facilities(2021:$69.5 million).Caribbean Utilities Company,Ltd.2022 Annual Report 19 C Contractual Obligationsontractual Obligations As at December 31,2022,the contractual obligations of the Company over the next five years and periods thereafter are outlined in the following table:
191、Contractual ObligationsContractual Obligations ($thousands)TotalTotal 1 year 5 years 5 years Total Debt 359,025 19,481 39,870 37,726 261,948 Long-Term Debt Interest 208,020 18,367 29,283 26,171 134,199 Total Total 567,045567,045 37,84837,848 69,15369,153 63,8963,897 7 396,147396,147 Power Purchase O
192、bligation In 2015,the Company entered into a PPA with Bodden Town Solar 1,Ltd.,which will provide a minimum generated energy of 8.8 gigawatt hours(“GWh”)per year for a 25-year term.The PPA qualifies for the Normal Purchase Normal Sale exemption under Accounting Standards Codification(“ASC”)815 and d
193、oes not qualify as a derivative.Fuel Purchase Obligation The Company has a primary fuel supply contract with RUBiS Cayman Islands Limited(“RUBiS”).Under the agreement,the Company is committed to purchase approximately 60%of its diesel fuel requirements for its generating plant from RUBiS.The Company
194、 also has a secondary fuel supply contract with Sol Petroleum Cayman Limited(“Sol”)and is committed to purchase approximately 40%of the Companys fuel requirements for its generating plant from Sol.In June 2018,the Company executed new fuel supply contracts with RUBis and Sol,each with a term of 24 m
195、onths,with the option to renew for two additional terms of 18 months.The option to renew for an additional 18 months was exercised in June 2020 and again in December 2021,ending May 2023.The approximate remaining quantities under the fuel supply contract with RUBiS on an annual basis is 0.5 million
196、IGs for the year ended December 31,2022 and 11.3 million IGs for the five months ended May 31,2023.The approximate remaining quantities under the fuel supply contract with Sol on an annual basis is 0.5 million IGs for the year ended December 31,2022 and 8.8 million IGs for the five months ended May
197、31,2023.Both contracts qualify for the Normal Purchase Normal Sale exemption under ASC 815 and do not qualify as derivatives.Financial Position Financial Position The following table is a summary of significant changes to the Companys balance sheet,when comparing Fiscal 2022 to Fiscal 2021.Significa
198、nt Significant C Changes in Balance Sheethanges in Balance Sheet (for the year ended December 31,2022)Balance Sheet AccountBalance Sheet Account Increase/Increase/(Decreas(Decrease e)($thousands)($thousands)ExplanationExplanation Cash and Cash Equivalents 588 Increase due to cash provided by operati
199、ng activities of$56.1 million and cash provided by financing activities of$41.6 million offset by cash used in investing activities of$97.2 million.Accounts Receivable 10,292 Increase due to higher kWh electricity sales and increase in the fuel cost charge rate.Regulatory Assets 17,164 Increase due
200、to an increase in the fuel tracker account balance driven by higher fuel costs and the CUC Fuel Relief Programme deferral amounting to$6.3 million.Property,Plant and Equipment 60,249 Increase due to capital expenditures for the year particularly on Distribution System Extension and Upgrades($24.3 mi
201、llion),Generation Replacement ($15.6 million)and Alternative Energy projects($12.4 million).Caribbean Utilities Company,Ltd.2022 Annual Report 20 S Significant ignificant C Ch hanges in Balance Sheetanges in Balance Sheet (for the year ended December 31,2022)Accounts Payable and Accrued Expenses 15,
202、759 Increase attributable to increases in fuel costs payable and higher capital expenditure accruals.Long-Term Debt 60,297 Increase due to the$80 million long term debt acquired during the year offset by principal payments made on the Companys Senior Unsecured Notes in Fiscal 2022.Share Premium 4,33
203、6 Increase due to the issuance of 295,246 Class A Ordinary Shares through its share purchase plans.Retained Earnings 5,975 Increase due to net earnings for the year of$33.2 million,offset by dividend payments on the Class A Ordinary Shares of$26.2 million,and dividend payments on the Class B Prefere
204、nce Shares of$1.0 million.Capital ResourcesCapital Resources To ensure access to capital,the Company targets a long-term capital structure of approximately 45%equity,including preference shares,and 55%debt.The Companys objective is to maintain investment-grade credit ratings.The Company sets the amo
205、unt of capital in proportion to risk.The debt to equity ratio is managed through various methods such as the Offering and the Companys share purchase plans.Certain of the Companys long-term debt obligations have covenants restricting the issuance of additional debt such that consolidated debt cannot
206、 exceed 65%of the Companys consolidated capital structure,as defined by short-term and long-term debt agreements.As at December 31,2022,the Company was in compliance with all debt covenants.The Companys capital structure is presented in the following table:C Ca ap pi it ta al l S St tr ru uc ct tu u
207、r re e December 31,2022December 31,2022 ($thousand($thousands s)%December 31,2021December 31,2021 ($thousand($thousands s)%Total Debt 357,511357,511 5454 293,291 50 Shareholders Equity 308,308,2 23434 4646 297,878 50 TotalTotal 66665 5,7,74545 100100 591,169 100 The change in the Companys capital st
208、ructure between December 31,2022 and December 31,2021 was a net effect of long term debt acquired during the year and principal payments of$15.6 million made on the Companys Senior Unsecured Notes.The Companys credit ratings under Standard&Poors(“S&P”)and the DBRS Morningstar(“DBRS”)are as follows:D
209、BRS A(low)/Stable S&P BBB+/Stable The S&P rating is in relation to long-term corporate credit and senior unsecured debt while the DBRS rating relates to senior unsecured debt.In February 2023,DBRS Morningstar affirmed the Companys“A”credit rating while maintaining the categorization of low with a St
210、able trend.The current ratings reflect(1)CUCs strong credit metrics for the first 12 months ended September 30,2022 and expected to remain stable in the medium term;(2)stable business profile;(3)its solid resilience in coping with inflation and higher interest rates;and increase in electricity deman
211、d benefitting from economic recovery following a period of COVID-19 pandemic restrictions.The ratings also incorporate the CUCs exposure to,and its ability to cope with,hurricane risks and the relatively small size of its operations and customer base.In May 2022,S&P revised its outlook of the Compan
212、y to stable from negative due to consistent financial performance.Despite the pandemic which negatively affected Caymans tourism industry,CUCs financial measures have consistently remained above S&Ps downgrade threshold.Caribbean Utilities Company,Ltd.2022 Annual Report21 C Capitaapital l Expenditur
213、esExpendituresCapital expenditures net of contribution in aid of construction for Fiscal 2022 were$95.8 million,a$35.6 million,or 59%increase from$60.2 million in capital expenditures for Fiscal 2021.The capital expenditures for Fiscal 2022 primarily related to:?Distribution System Extension and Upg
214、rades-$24.3 million.?Generation Replacement-$15.6 million.?Engine Room 5 Dual Fuel Conversion-$9.8 million?Purchase of Gas Turbine-$9.6 million.?Utility Scale Battery-$7.3 million.?Alternate Energy Technologies$5.1 million.?Facility and Auxiliary Asset Replacement Cost$3.1 million?AFUDC of$8.8 milli
215、on was capitalised in Fiscal 2022.C Capitaapital l ExpenditureExpenditures s ($thousands)Y Ye ea ar r E En nd de ed d D De ec ce em mb be er r 3 31 1,2 20 02 22 2 Y Ye ea ar r E En nd de ed d D De ec ce em mb be er r 3 31 1,2 20 02 21 1 ChangeChange%ChangChange e ForecasForecast t 2022023 3 Transmis
216、sion 6,6616,661 5,85880314%9,213Distribution2 28 8,5 54 42 2 28,084 458 2%36,216 Generation57,83857,838 25,28732,551129%63,350Other2,7202,720 9731,747180%13,236TotalTotal 95,76195,761 60,20235,55959%122,015OfOff f Balance-SheeBalance-Sheet t ArrangementsArrangementsThe Company has no off-balance she
217、et arrangements such as transactions,agreements,or contractual arrangements with unconsolidated entities,structured finance entities,special purpose entities or variable interest entities that are reasonably likely to materially affect liquidity of or the availability of,or requirements for capital
218、resources.-3.7 9.9 15.1 17.6 23.6 27.9 33.6 39.4 43.2 49.6 60.2-4.6 13.8 18.4 27.1 33.4 38.0 45.3 57.9 64.8 71.2 95.8 Jan Feb Mar Apr May JunJul Aug Sep Oct Nov DecCAPITAL EXPENDITURE(in millions)20212022Caribbean Utilities Company,Ltd.2022 Annual Report 22 B Business Risksusiness Risks The followin
219、g is a summary of the Companys significant business risks:Operational Risks Operational risks are those risks normally inherent in the operation of generation,transmission and distribution facilities.The Companys facilities are subject to the risk of equipment failure due to deterioration of the ass
220、et from use or age,latent defects and design or operator error,among other things.These risks could lead to longer-than-forecasted equipment downtimes for maintenance and repair,disruptions of power generation,customer service interruptions,or could result in injury to employees and the public.Accor
221、dingly,to ensure the continued performance of the physical assets,the Company determines expenditures that must be made to maintain and replace the assets.Electricity systems require ongoing maintenance,improvement and replacement.Service disruption,other effects and liability caused by the failure
222、to properly implement or complete approved maintenance and capital expenditures,or the occurrence of significant unforeseen equipment failures,despite maintenance programmes could have a material adverse effect.The operation of transmission and distribution assets is subject to risks,including the p
223、otential to cause fires,mainly as a result of equipment failure,falling trees and lightning strikes to lines or equipment.The Company continually develops capital expenditure,safety management and risk control programmes and assesses current and future operating and maintenance expenses that will be
224、 incurred in the ongoing operation of its systems.The Company also has an insurance programme that provides coverage for business interruption,liability and property damage,although the coverage offered by this programme is limited(see“Business Risks Insurance-Terms and Coverage”for discussion of in
225、surance terms and coverage).In the event of a large uninsurable loss,the Company would apply to the OfReg for recovery of these costs through higher rates.However,there is no assurance that the OfReg will approve any such application(see“Business Risks-Regulation”section for a discussion of regulato
226、ry risk).Economic Conditions As with most utility companies,the general economic condition of CUCs service area,Grand Cayman,influences electricity sales.Changes in consumer demographic,income,employment and housing are all factors in the amount of sales generated.As the Company supplies electricity
227、 to all hotels and large properties,its sales are therefore partially based on tourism and related industry fluctuations.World economic conditions,particularly those in North America,directly impact Grand Caymans tourism industry.Rising inflationary pressures and fuel cost also impacts the customer
228、behavior,particularly the consumption for residential customers.Regulation The Company operates within a regulated environment and the operations of the Company are subject to the normal uncertainties faced by regulated companies.Such uncertainties include approval by the OfReg of adjustments to bil
229、ling rates that allow a reasonable opportunity to recover,on a timely basis,the estimated costs of providing services,including a fair return on rate base assets and the assessment of penalties against the Company for not meeting regulatory performance standards.The Companys capital expenditure plan
230、 requires regulatory approval.There is no assurance that capital projects determined as being required by management of the Company will be approved by the OfReg.In addition,while in the event of a large uninsurable loss the Company would apply to the OfReg for recovery of these costs through higher
231、 rates,there is no assurance that the OfReg would approve such application.Environmental Matters CUCs operations are subject to local environmental protection laws concerning emissions to the air,discharges to surface and subsurface waters,noise,land use activities,and the handling,storage,processin
232、g,use,and disposal of materials and waste products.CUCs Environmental Management System(“EMS”)is registered to the ISO 14001 Environmental Standard.The Company was Caribbean Utilities Company,Ltd.2022 Annual Report 23 initially registered in 2004,pursuant to an audit by a third party of the EMS to e
233、nsure that the Company was meeting requirements put in place by the Government as well as self-imposed requirements.Under the ISO 14001 standard companies are required to establish,document,implement,maintain and continually improve their environmental performance with an aim of prevention of pollut
234、ion.In order to maintain the Companys registration to this Standard an external surveillance audit is conducted annually,and an external audit is conducted every three years for re-certification.Internal audits of the system must also be conducted on an annual basis.CUC has most recently conducted,a
235、nd successfully passed its re-certification audit in 2022.In May 2002,the United Kingdom(“UK”)ratified the Kyoto Protocol,which sets targets and timetables for the reduction of greenhouse gas(“GHG”)emissions,which was later extended to the Cayman Islands in March 2007.Under the Kyoto Protocol,the UK
236、 is legally bound to reduce its GHG emissions,however,Cayman has no emissions reduction target.As an overseas territory,the Cayman Islands are required to give available national statistics on an annual basis to the UK which will be added to its inventory and reported to the United Nations Framework
237、 Convention on Climate Change(“UNFCCC”)Secretariat.Under the UNFCCC,governments are obligated to gather and report information on GHG emissions through the preparation of a national greenhouse gas inventory.The inventory primarily requires the Cayman Islands to quantify as best as possible the count
238、rys fuel consumption across a variety of sectors,production processes and distribution means.CUC continues to supply the Department of Environment with data for Caymans GHG inventory.Through the EMS,CUC has determined that its exposure to environmental risks is not significant and does not have an i
239、mpact on CUCs financial reporting including the recording of any asset retirement obligations.Weather and Natural Disasters CUCs facilities are subject to the effects of severe weather conditions,principally during the hurricane season months of June through November.In addition,the Cayman Islands l
240、ie close to the boundary zone of the Caribbean and North American tectonic plates.This transform boundary,where the plates slide past each other,is known to generate earthquakes from time to time.Despite preparations for disasters such as hurricanes and earthquakes,adverse conditions will always rem
241、ain a risk.This risk is partially mitigated by the Companys comprehensive insurance,which management of the Company believes is appropriate and consistent with insurance policies obtained by similar companies.During severe weather or other natural disasters,generation equipment,facilities and T&D as
242、sets are subject to risks.These risks include equipment breakdown and flood damage,which may result in interruption of fuel supply,lower-than-expected operational efficiency or performance,and service disruption.There is no assurance that generation equipment,facilities and T&D assets will continuou
243、sly operate in accordance with expectations in these situations.Climate Change and Physical Risks Climate change is predicted to lead to more frequent and intense weather events,changing air temperatures,and regulatory responses,each of which could have a material adverse effect.Increased frequency
244、of extreme weather events could increase the cost of providing service.Extreme weather conditions in general require system backup and can contribute to increased system stress,including service interruptions.Longer-term climate change impacts,such as sustained higher temperatures,higher sea levels
245、and larger storm surges,could result in service disruption,repair and replacement costs,and costs associated with strengthened design standards and systems,each of which could have a material adverse effect if not resolved in a timely and effective manner.Global Pandemic The development and rapid ev
246、olution of the COVID-19 pandemic has illustrated the risk to global economies,including that of the Cayman Islands,with the closure of businesses,schools,hotels,restaurants,seaports and airports.Steps warranted to protect the health and safety of employees,customers and communities,including actions
247、 based on guidance from the Cayman Islands Government and the relevant health authorities inevitably influence the economic conditions in the service area of the Company and impact electricity sales.The evolution of a pandemic increases uncertainty with regard to operational and financial performanc
248、e of the Company that may result in material adverse effects and affect the Companys ability to execute Caribbean Utilities Company,Ltd.2022 Annual Report 24 business strategies and initiatives within expected time frames.Potential key impact areas could include revenue,capital expenditures,liquidit
249、y,and regulatory matters.Insurance-Terms and Coverage The Company renewed its insurance policy as at July 1,2022 for one year under similar terms and coverage as in prior years.Insurance terms and coverage include$250.0 million in property and machinery breakdown insurance and business interruption
250、insurance per annum with a 24-month indemnity period and a waiting period on non-named Wind,Quake and Flood of 60-days.Any Named Wind,Quake and Flood deductible has a 45-day waiting period.All T&D assets outside of 1,000 feet from the boundaries of the main power plant and substations are excluded,a
251、s the cost of such coverage is not considered economical.There is a single event cap of$250 million.Each“loss occurrence”is subject to a deductible of$1.0 million,except for windstorm(including hurricane)and earth movement for which the deductible is 2%of the value of each location that suffers loss
252、,but subject to a minimum deductible of$1.0 million and maximum deductible of$4.0 million for all interests combined.In accordance with the T&D Licence,when an asset is impaired or disposed of within its original estimated useful life,the cost of the asset is reduced and the net book value is charge
253、d to accumulated depreciation.This treatment is in accordance with rate regulated accounting and differs from the accounting principles generally accepted in the United States of America(“US GAAP”)treatment of a loss being recognised on the statement of earnings.The amount charged to accumulated dep
254、reciation is net of any proceeds received in conjunction with the disposal of the asset.Insurance proceeds are included within the criteria.In addition to the coverage discussed above,the Company has also purchased an excess layer of an additional$150.0 million limit on property and business interru
255、ption(excluding windstorm,earth movement and flood).Other insurance coverage includes,but is not limited to;business interruption which covers losses resulting from the necessary interruption of business caused by direct physical loss or damage to CUCs covered property,and loss of revenues resulting
256、 from damage to customers property.Defined Benefit Pension Plan The Company maintains a defined benefit pension plan,which provides a specified monthly benefit on retirement irrespective of individual investment returns.There are currently two participants in the pension plan.The assumed long-term r
257、ate of return on pension plan assets for the purposes of estimating pension expense for 2022 is 5%.This compares to assumed long-term rates of return of 5%used during 2021.There is no assurance that the pension plan assets will be able to earn the assumed rate of returns.The loss on pension plan ass
258、ets during 2022 was 32%due to the investment performance(2021:gain of 4%).Market driven changes impacting the performance of the pension plan assets may result in material variations in actual return on pension plan assets from the assumed return on the assets causing material changes in consolidate
259、d pension expense and funding requirements.Net pension expense is impacted by,among other things,the amortisation of experience and actuarial gains or losses and expected return on plan assets.Market driven changes impacting other pension assumptions,including the assumed discount rate,may also resu
260、lt in future consolidated contributions to pension plans that differ significantly from current estimates as well as causing material changes in consolidated pension expense.The discount rate assumed for 2022 is 2.8%compared to the discount rate assumed during 2021 of 2.4%.There is also measurement
261、uncertainty associated with pension expense,future funding requirements,the accrued benefit asset,accrued benefit liability and benefit obligation due to measurement uncertainty inherent in the actuarial valuation process.A discussion of the critical accounting estimates associated with pensions is
262、provided under the“Critical Accounting Estimates”section of this MD&A.Caribbean Utilities Company,Ltd.2022 Annual Report 25 Cybersecurity and Information and Operations Technology The ability of the Company to operate effectively is dependent upon using and maintaining complex information systems an
263、d infrastructure that:(i)support the operation of generation,transmission and distribution facilities;(ii)provide customers with billing,consumption and load settlement information,where applicable;and(iii)support financial and general operations.Information and operations technology systems may be
264、vulnerable to unauthorized access or disruption due to cyber-and other attacks,including hacking,malware,acts of war or terrorism,and acts of vandalism,among others.CUC has a Cyber Risk Management Programme which was initiated in 2019.The programme mandates minimum cybersecurity requirements,annual
265、risk assessments of information and operational technology assets with findings being tracked and remediated based on risk rating.Annual business continuity and vulnerability/penetration testing are also required.The programme adheres to the National Institute of Standards and Technology and ISO 270
266、01 standards.Financial Instruments Financial Instruments The Company is primarily exposed to credit risk,liquidity risk,and interest rate risk as a result of holding financial instruments in the normal course of business.Financial instruments of the Company consist mainly of cash,accounts receivable
267、,accounts payable,accrued expenses,consumers deposits and advances for construction and long-term debt.Credit Risk The Company is exposed to credit risk in the event of non-payment by counterparties to derivative financial instruments,which include fuel option contracts.If a counterparty fails to pe
268、rform on its contractual obligation to deliver payment when the market price of fuel is greater than the strike price,the Company may find it necessary to purchase diesel at the market price,which will be higher than the contract price.The Company manages this credit risk associated with counterpart
269、ies by conducting business with high credit-quality institutions.The Company does not expect any counterparties to fail to meet their obligations.There is a risk that the Company may not be able to collect all of its accounts receivable and other assets.This does not represent a significant concentr
270、ation of risk.The requirements for security deposits for certain customers,which are advance cash collections from customers to guarantee payment of electricity billings,reduces the exposure to credit risk.The Company manages credit risk primarily by executing its credit collection policy,including
271、the requirement for security deposits,through the resources of its customer service department.Liquidity Risk The Companys financial position could be adversely affected if it failed to arrange sufficient and cost-effective financing to fund,among other things,capital expenditures and the repayment
272、of maturing debt.The ability to arrange such financing is subject to numerous factors,including the results of operations and financial position of the Company,conditions in the capital and bank credit markets,ratings assigned by ratings agencies and general economic conditions.These factors are mit
273、igated by the terms of the Licences,which allows for rates to be set to enable the Company to achieve and maintain a sound credit rating in the financial markets of the world.The Company has also secured committed credit facilities to support short-term financing of capital expenditures and seasonal
274、 working capital requirements.The cost of renewed and extended credit facilities could increase in the future;however,any increase in interest expense and fees is not expected to materially impact the Companys consolidated financial results in 2022.The ongoing economic impact from rising fuel cost a
275、nd global inflationary environment may affect CUCs customers ability to pay their energy bills.During 2022,CUC had various customer relief initiatives,including the suspension of non-payment disconnects and late fees,and payment deferral programs to help ease the financial burden on customers.See No
276、te 6 in the Consolidated Financial Statements.Caribbean Utilities Company,Ltd.2022 Annual Report 26 Interest Rate Risk Long-term debt is issued at fixed interest rates,thereby minimizing cash flow and interest rate exposure.The Company is primarily exposed to risks associated with fluctuating intere
277、st rates on its short-term borrowings and other variable interest credit facilities.The current amount of short-term borrowings is$nil(December 31,2021:$nil).A Accounting Policies ccounting Policies The 2022 Annual Consolidated Financial Statements have been prepared following the same accounting po
278、licies and methods as those used to prepare the Companys 2021 annual audited consolidated financial statements.F Future Accounting Policiesuture Accounting Policies The Company considers the applicability and impact of all Accounting Standards Updates issued by the Financial Accounting Standards Boa
279、rd(“FASB”).ASUs were assessed and determined to be either not applicable to the Company or are not expected to have a material impact on CUCs consolidated financial statements and related disclosures.Critical Accounting EstimatesCritical Accounting Estimates The preparation of the Companys consolida
280、ted financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues
281、 and expenses during the period.Estimates are based on historical experience,current conditions and various other assumptions believed to be reasonable under the circumstances.Due to changes in facts and circumstances and the inherent uncertainty involved in making estimates,actual results may diffe
282、r significantly from the current estimates.Estimates are reviewed periodically and,as adjustments become necessary,are reported in earnings in the period in which they become known.The Companys critical accounting estimates relate to:Employee Future Benefits The Companys defined benefit pension plan
283、 is subject to judgments utilised in the actuarial determination of the expense and related obligation.There are currently two participants in the Companys defined benefit pension plan.The main assumptions utilised by management of the Company in determining pension expense and obligations were the
284、discount rate for the accrued benefit obligation,inflation and the expected rate of return on plan assets.As at December 31,2022,the Company has a long-term liability of$1.8 million(December 31,2021:$1.9 million).Property,Plant and Equipment(“PP&E”)Depreciation Depreciation is an estimate based prim
285、arily on the estimated useful life of the asset.Estimated useful life is based on current facts and historical information and takes into consideration the anticipated physical life of the assets.As at December 31,2022,the net book value of the PP&E was$636.9 million,compared to$576.7 million as at
286、December 31,2021,increasing as a result of the Companys generation and T&D capital expenditures.Depreciation expense for Fiscal 2022 was$38.0 million($38.1 million for Fiscal 2021).Due to the value of the Companys PP&E,changes in depreciation rates can have a significant impact on the Companys depre
287、ciation expense.Caribbean Utilities Company,Ltd.2022 Annual Report 27 S Selected Annual Financial Informationelected Annual Financial Information The following table sets out the annual financial information of the Company for the financial years ended December 31,2022,2021 and 2020.S Se el le ec ct
288、 te ed d A An nn nu ua al l F Fi in na an nc ci ia al l I In nf fo or rm ma at ti io on n ($thousands,except Earnings per Class A Ordinary Share,Dividends declared per Class A Ordinary Share and where otherwise indicated)Year EndYear Ende ed d December 3December 31 1,20202 22 2 Year EndYear Ende ed
289、d December 3December 31 1,20202 21 1 Year EndYear Ende ed d December 3December 31 1,20202 20 0 Total Operating Revenues 2 26 67 7,3 33 36 6 198,478 177,450 Net Earnings for the Year 3 33 3,1 17 79 9 30,319 26,065 Earnings on Class A Ordinary Shares 3 32 2,2 20 09 9 29,349 25,095 Total Assets 7 72 26
290、 6,5 53 39 9 634,150 633,667 Long-Term Debt 3 33 38 8,0 03 30 0 277,733 293,176 Preference Shares 2 25 50 0 250 250 Total Shareholders Equity 3 30 08 8,2 27 79 9 297,878 289,499 Earnings per Class A Ordinary Share 0 0.8 86 6 0.79 0.74 Diluted Earnings per Class A Ordinary Share 0 0.8 86 6 0.79 0.74
291、Dividends Declared per Class A Ordinary Share 0 0.7 70 0 0.70 0.70 Dividends Declared per Class B Preference Share 3 3.8 88 8 3.88 3.88 Comparative results 2022/2021 Comparative results 2022/2021 Operating revenues for Fiscal 2022 totalled$267.3 million,an increase of$68.9 million from$198.5 million
292、 for Fiscal 2021.Net earnings for Fiscal 2022 were$33.2 million,a$2.9 million increase from net earnings of$30.3 million for Fiscal 2021.This increase is primarily attributable to higher operating income and higher other income.For a discussion of the reasons for the changes in Operating Revenues,Ea
293、rnings on Class A Ordinary Shares and Earnings per Class A Ordinary Share,refer to the“Operating Revenues”and“Earnings”sections of this MD&A.The growth in total assets was mainly due to the distribution system extension and upgrades,and generation replacement costs.The increase in long-term debt was
294、 mainly due to long term debt of$80.0 million obtained in Fiscal 2022.2022 Fourth Quarter Results 2022 Fourth Quarter Results Net earnings for the three months ended December 31,2022(“Fourth Quarter 2022”)were$9.0 million,a$0.7 million increase when compared to$8.3 million for the three months ended
295、 December 31,2021(“Fourth Quarter 2021”).This increase was due to higher electricity sales revenues of$26.0 million(Fourth Quarter 2021:$24.5 million),lower maintenance costs of$1.4 million(Fourth Quarter 2021:$1.5 million)and lower T&D cost of$1.0 million(Fourth Quarter 2021:$1.4 million),offset by
296、 higher consumer services cost of$1.6 million(Fourth Quarter 2021:$0.9 million),and higher general and administration expenses of$2.7 million(Fourth Quarter 2021:$2.1 million).After the adjustment for dividends on the preference shares of the Company,earnings on Class A Ordinary Shares for the Fourt
297、h Quarter 2022 were$8.3 million,or$0.22 per Class A Ordinary Share,as compared to$7.7 million,or$0.21 per Class A Ordinary Share for the Fourth Quarter 2021.Sales for the Fourth Quarter 2022 were 169.5 million kWh,an increase of 3.5 million kWh when compared to 166.0 million kWh for the Fourth Quart
298、er 2021.The increase was driven by an increase in the large commercial and residential customers kWh consumption in Fourth Quarter 2022.Total operating expenses for the Fourth Quarter 2022 increased by 48%or$22.7 million to$70.0 million from$47.3 million for the Fourth Quarter 2021.The main contribu
299、ting factors to this increase were higher fuel cost,depreciation,consumer services and general and administration cost offset by lower transmission and distribution cost and maintenance cost.Caribbean Utilities Company,Ltd.2022 Annual Report 28 Cash flow provided by operations,after working capital
300、adjustments,for the Fourth Quarter 2022,was$5.2 million,a decrease of$9.8 million when compared to$15.0 million for the Fourth Quarter 2021.This decrease was primarily due to changes in non-cash working capital balances offset by higher earnings for the period.Cash used in investing activities total
301、led$31.4 million for the Fourth Quarter 2022,an increase of$15.0 million from$16.4 million for the Fourth Quarter 2021.This increase was due to higher capital expenditures and higher contributions in aid of construction.Cash provided by financing activities totalled$25.4 million for the Fourth Quart
302、er 2022,an increase of$19.1 million from$6.3 million provided by financing activities for the Fourth Quarter 2021.The increase relates to the additional long-term debt acquired during the period offset by repayment of short-term debt.Capital expenditures for the Fourth Quarter 2022 were$30.0 million
303、,a$13.9 million,or 86%,increase from$16.1 million for the Fourth Quarter 2021.Q Quarterly Resultsuarterly Results The following table summarises unaudited quarterly information for each of the eight quarters ended March 31,2021 through December 31,2022.This information has been obtained from CUCs un
304、audited interim financial statements,which management of the Company prepared in accordance with US GAAP.These operating results are not necessarily indicative of results for any future period and should not be relied upon to predict future performance.Q Qu ua ar rt te er rl ly y R Re es su ul lt ts
305、 s ($thousands,except Earnings per Class A Ordinary Share and Diluted Earnings per Class A Ordinary Share)OperatiOperatin ng g RevenRevenu ue e Net EarninNet Earning gs s Earnings on ClaEarnings on Clas ss s A Ordinary SharA Ordinary Share es s Earnings per ClaEarnings per Clas ss s A Ordinary ShaA
306、Ordinary Shar re e Diluted EarninDiluted Earning gs s per Classper Class A A Ordinary ShaOrdinary Shar re e December 31,202December 31,2022 2 78,478,49 91 1 8,968,961 1 8,8,3 32 29 9 0.20.22 2 0.20.22 2 September 30,2022September 30,2022 79,079,03 31 1 10,410,42 20 0 10,310,30 08 8 0.280.28 0.280.28
307、 June 30,2022June 30,2022 58,158,16 67 7 8,318,310 0 8,198,197 7 0.220.22 0.220.22 March 31March 31,2022 2022 51,651,64 48 8 5,485,485 5 5,375,372 2 0.140.14 0.140.14 December 31,2021 55,276 8,330 7,697 0.21 0.21 September 30,2021 56,102 10,098 9,985 0.26 0.26 June 30,2021 48,257 8,562 8,449 0.23 0.
308、23 March 31,2021 38,843 3,329 3,216 0.09 0.09 December 2022/December 2021 Net earnings for the three months ended December 31,2022(“Fourth Quarter 2022”)were$9.0 million,a$0.7 million increase when compared to$8.3 million for the three months ended December 31,2021(“Fourth Quarter 2021”).This increa
309、se was due to higher electricity sales revenues of$26.0 million(Fourth Quarter 2021:$24.5 million),lower maintenance costs of$1.4 million(Fourth Quarter 2021:$1.5 million)and lower T&D cost of$1.0 million(Fourth Quarter 2021:$1.4 million),offset by higher consumer services cost of$1.6 million(Fourth
310、 Quarter 2021:$0.9 million),and higher general and administration expenses of$2.7 million(Fourth Quarter 2021:$2.1 million).After the adjustment for dividends on the preference shares of the Company,earnings on Class A Ordinary Shares for the Fourth Quarter 2022 were$8.3 million,or$0.22 per Class A
311、Ordinary Share,as compared to$7.7 million,or$0.21 per Class A Ordinary Share for the Fourth Quarter 2021.Caribbean Utilities Company,Ltd.2022 Annual Report 29 September 2022/September 2021 Net earnings for the three months ended September 30,2022(“Third Quarter 2022”)totalled$10.4 million,a decrease
312、 of$0.3 million when compared to$10.1 million for the three months ended September 30,2021(“Third Quarter 2021”).After the adjustment for dividends on the preference shares of the Company,earnings on Class A Ordinary Shares for the Third Quarter 2022 were$10.3 million,or$0.28 per Class A Ordinary Sh
313、are,compared to earnings on Class A Ordinary Shares of$10.0 million,or$0.26 per Class A Ordinary Share for the Third Quarter 2021.June 2022/June 2021 Operating income for the three months ended June 30,2022(“Second Quarter 2022”)totalled$8.1 million,a decrease of$0.8 million when compared to operati
314、ng income of$8.9 million for the three months ended June 30,2021(“Second Quarter 2021”).The decrease is primarily attributable to an increase in general and administration expenses,customer services and depreciation,which was partially offset by an increase in electricity sales.Electricity sales rev
315、enues for Q2 2022 increased due to higher kWh sales and a 5.4%base rate increase that went into effect on June 1,2022.Due to the current economic environment and rising fuel prices,OfReg approved the Companys proposal to defer billing of the required rate increase until January 1,2023.The amount rec
316、orded as deferred revenue for June 2022 was$0.4 million.Net earnings for the Second Quarter 2022 totalled$8.3 million,a decrease of$0.3 million from$8.6 million in Second Quarter 2021.Partially offsetting the items impacting operating income,net earnings during the quarter were positively impacted b
317、y lower finance charges and higher other income.After the adjustment for dividends on the preference shares of the Company,earnings on Class A Ordinary Shares for Second Quarter 2022 were$8.2 million,or$0.22 per Class A Ordinary Share,compared to earnings on Class A Ordinary Shares of$8.4 million,or
318、$0.23 per Class A Ordinary Share for Second Quarter 2021.March 2022/March 2021 Operating income for the three months ended March 31,2022(“First Quarter 2022”)totalled$5.2 million,an increase of$1.5 million from$3.7 million for three months ended March 31,2021(“First Quarter 2021”).The increase is pr
319、imarily attributable to higher electricity sales revenues and lower depreciation expense.These items were partially offset by higher general and administration,transmission and distribution and customer service expenses.Net earnings increased$2.2 million from$3.3 million in First Quarter 2021 to$5.5
320、 million in First Quarter 2022.The increase in net earnings is primarily attributable to higher operating income and lower financecharges.After the adjustment for dividends on the preference shares of the Company,earnings on Class A Ordinary Shares for the First Quarter 2022 were$5.4 million or$0.14
321、 per Class A Ordinary Share,compared to earnings on Class A Ordinary Shares of$3.2 million,or$0.09 per Class A Ordinary Share for the First Quarter 2021.D Disclosure Controls and Proceduresisclosure Controls and Procedures The President and Chief Executive Officer(“CEO”)and the Chief Financial Offic
322、er(“CFO”),together with management of the Company,have established and maintained the Companys disclosure controls and procedures (“DC&P”),to provide reasonable assurance that material information relating to the Company is made known to them by others,including during the year ending December 31,20
323、22;and information required to be disclosed by the issuer in its annual filings,interim filings,or other reports filed or submitted by it under securities legislation is recorded,processed,summarised and reported within the time periods specified in securities legislation.Based on the evaluation per
324、formed of DC&P,it was concluded that the DC&P of CUC is adequately designed and operating effectively as of December 31,2022.Caribbean Utilities Company,Ltd.2022 Annual Report 30 I Internal Controls over Financial Reporting(“ICFR”)nternal Controls over Financial Reporting(“ICFR”)The CEO and CFO of t
325、he Company,together with management of the Company,have established and maintained the Companys ICFR,as defined in National Instrument 52-109 Certification of Disclosure in Issuers Annual and Interim Filings,to provide reasonable assurance regarding the reliability of financial reporting and the pre
326、paration of financial statements for external purposes in accordance with US GAAP.Because of its inherent limitations,internal control over financial reporting may not prevent or detect misstatements.Also,projections of any evaluation of effectiveness to future periods are subject to risk that contr
327、ols may become inadequate because of changes in conditions,or that the degree of compliance with the policies or procedures may deteriorate.The design of CUCs internal controls over financial reporting has been established and evaluated using the criteria set forth in the 2013 Internal Control-Integ
328、rated Framework by the Committee of Sponsoring Organizations of the Treadway Commission.Based on the assessment,it was concluded that CUCs internal controls over financial reporting are adequately designed and operating effectively as of December 31,2022.There have been no changes in the Companys IC
329、FR that occurred during the year ended December 31,2022 that have materially affected,or are reasonably likely to materially affect,the Companys internal control over financial reporting.Outlook Outlook In October 2021,following a consultation process,OfReg announced the adoption of a new Renewable
330、Energy Auction Scheme(“REAS”)to solicit additional solar and wind power over the next decade.In April 2022,OfReg issued a Request for Qualification(“RFQ”)for the REAS Competition Round 1.The REAS Round 1 is intended to select a party,or parties,to operate and maintain Solar Photovoltaic Plants and E
331、nergy Storage up to 100MW with 60MW Battery Energy Storage System Facility.OfReg also issued an RFQ for a 23MW Dispatchable Photovoltaic(“DPV”)Generation plant paired with energy storage facility.CUC prequalified for both opportunities and is preparing to participate in these bid invitations.The Com
332、pany has been working with OfReg to provide all information required for issuing the RFP.The Government announced on April 27,2022 a change in policy direction and its intention to hold a majority ownership stake in all future large scale renewable energy projects.CUC remains in discussions with the
333、 Government and OfReg to determine what impact this announcement will have on future renewable energy plans.The Company has also progressed with developing an offering for customer sited solar projects and seeks to create a programme that CUC would offer to its customers where the Company supplies and installs renewable energy systems on the customer premises and a fee arrangement is created to sh
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