1、Caribbean Utilities Company,Ltd.2024 Annual Report 2024 ANNUAL REPORT Caribbean Utilities Company,Ltd.Caribbean Utilities Company,Ltd.2024 Annual Report About the Company Caribbean Utilities Company,Ltd.,(“CUC”or the“Company”),commenced operations as the only electric utility in Grand Cayman on May
2、10,1966.The Company currently has an installed generating capacity of 166 megawatts(“MW”).The record peak load of 128.0 MW was experienced on September 17,2024.CUC is committed to providing a safe and reliable supply of electricity to over 34,000 customers.The Company has been through many challengi
3、ng and exciting periods but has kept pace with Grand Caymans development for over the past 58 years.About the Cayman Islands The Cayman Islands,a British Overseas Territory with a population of approximately 84,000,are comprised of three islands:Grand Cayman,Cayman Brac,and Little Cayman.Located app
4、roximately 150 miles south of Cuba,460 miles 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 Her Excellency Mrs.Jane Owen,is appointed by His Majesty the King.A democratic society,the Cayman Islands have a Hous
5、e of Parliament comprised of representatives elected from 19 electoral districts.In June 2023,Moodys affirmed the Cayman Islands Governments Aa3 bond issuer rating,Aaa country ceiling rating,and stable economic outlook.Rate of Exchange The closing rate of exchange on December 31,2024 as reported by
6、the Bank of Canada for the conversion of United States dollars into Canadian dollars was Cdn$1.4389(December 31,2023:Cdn$1.3226)per 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 fix
7、ed at CI$1.00 per US$1.20.Thus,the rate of exchange as of December 31,2024 for conversion of Cayman Islands dollars into Canadian dollars was Cdn$1.7267(December 31,2023:Cdn$1.5871)per CI$1.00.All amounts in this Annual Report are stated in United States dollars,unless otherwise noted.Caribbean Util
8、ities Company,Ltd.2024 Annual Report Table of Contents Highlights 1 Your Investment,Our Commitment 2 Letter to Fellow Shareholders 3 Managements Discussion and Analysis 7 Managements Responsibility for Financial Reporting 29Independent Auditors Report 30 Consolidated Balance Sheets 33Consolidated St
9、atements of Earnings 34Consolidated Statements of Comprehensive Income 35Consolidated Statements of Shareholders Equity 36Consolidated Statements of Cash Flows 37Notes to Annual Consolidated Financial Statements 38 Ten-Year Summary 59Board of Directors 61Ex ecutive 62Shareholder and Corporate Inform
10、ation 63 Readers should review the note on page 7 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 Company,Ltd.2024 Annual Report Hi
11、ghlights Financial Results in Brief (Expressed in thousands of United States dollars unless stated otherwise)Year Ended December 31,2024 Year Ended December 31,2023 Change%Operating Revenues 293,682 287,225 2%Electricity Sales Revenues 121,913 114,220 7%Fuel Factor 163,615 166,573-2%Renewables 6,155
12、 6,432-4%Z-Factor 1,999-100%Total Operating Expenses 253,192 248,808 2%Finance Charges 5,854 6,455-9%Net Earnings for the Year 42,687 38,660 10%Total Assets 850,962 777,807 9%Total Shareholders Equity 393,374 324,742 21%Cash Flow Related to Operating Activities 91,464 80,781 13%The following items a
13、re fully stated,not in thousands:Earnings per Class A Ordinary Share 1.08 1.00 8%Dividends per Class A Ordinary Share(paid and declared)0.735 0.715 3%Book Value per Class A Ordinary Share Class A Ordinary Shares Market Price:9.32 8.51 10%High 14.45 14.65 Low 11.00 10.76 Year End 13.98 10.90 Performa
14、nce Net earnings for the year ended December 31,2024 were$42.7 million,a$4.0 million increase compared to net earnings of$38.7 million for the year ended December 31,2023.This increase is primarily attributable to a 3%increase in kilowatt-hour(“kWh”)sales,a 3.2%increase in base rates effective June
15、1,2024,Z-Factor revenues,higher other income and lower finance charges,partially offset by higher depreciation and general&administration and maintenance costs.In May 2024,the Board of Directors approved a 3%increase in the quarterly dividend from$0.18 to$0.185 per Class A Ordinary Share.The Class A
16、 Ordinary Shares(CUP.U)are traded on the Toronto Stock Exchange and closed at$13.98 per share with dividend yield of 5.32%.The Company currently trades at 13.3x 2025 estimated earnings per share(“EPS”),which compares with the average 2025 estimated price to earnings ratio of 16.5x for the Canadian u
17、tilities peer group.Over the last five years,CUCs 12-month trailing P/E multiple has averaged 17.1x1.The graph below depicts the Companys share performance chart in comparison to the S&P/TSX Capped Utilities Index(“TTUT”,in blue)for the period January 1,2024 to December 31,2024.1 Equity Research pub
18、lished by TD Secutities Inc.on November 15,2024 Page|1Caribbean Utilities Company,Ltd.2024 Annual Report Your Investment,Our Commitment Fuel&Oil 36 The average price per imperial gallon of fuel decreased by 9%in 2024 compared to 2023.Our generators consumed approximately 40.9 million gallons of dies
19、el fuel and 119,600 gallons of lube oil in 2024 to meet electrical demand.The Company continues to focus its efforts on reducing greenhouse gas emissions through its investment in high fuel efficiency generation fleet and alternative energy projects.Capital Expenditures 23$100.6 million was spent on
20、 the replacement and upgrading of the generating units and transmission and distribution system,including investment in alternative energy.Loans&Loan Interest 28 A total of$37.9 million was paid in interest and principal repayments on loans.Dividends 7 In May 2024,the Board of Directors approved a 3
21、%increase in the quarterly dividends.Labour&Materials Our dedicated employees and well-maintained equipment provide a safe and reliable electricity service.Total 6 100 Page|2Caribbean Utilities Company,Ltd.2024 Annual ReportLetter to Fellow ShareholdersHighlights of 2024 include:During 2024,our focu
22、s on sustainable growth and strategic capital expenditures with our ongoing dedication to environmental stewardship,social responsibility,and economic sustainability positioned us for long-term success.Financial PerformanceOperating income for Fiscal 2024 increased by 5%compared to the twelve months
23、 ended December 31,2023(“Fiscal 2023”).The increase was primarily attributable to a 3%increase in kWh sales,a 3.2%base rate increase effective June 1,2024 and Z-Factor revenues,partially offset by higher depreciation,general and administration and maintenance costs.Net earnings for Fiscal 2024 were$
24、42.7 million,a$4.0 million or 10%increase from net earnings of$38.7 million for Fiscal 2023.We remain committed to delivering value to our shareholders.After the adjustment for dividends on the preference shares of the Company,earnings on Class A Ordinary Shares for Fiscal 2024 were$41.7 million,or$
25、1.08 per Class A Ordinary Share,compared to$37.7 million,or$1.00 per Class A Ordinary Share,for Fiscal 2023.Projects for a Greener Future In September 2024,CUCs first energy storage facility was commissioned and commercially operational.The 20 megawatt(“MW”)Battery Energy Storage System(“BESS”)proje
26、ct will allow for increased renewable energy capacity on Grand Cayman,lower fuel costs and improve fuel efficiency by 5%to 6%,leading to a corresponding reduction in CO2emissions.It will also increase CUCs reliability and its power quality.6%Increased employee engagement4%Increased customer satisfac
27、tion3%increase in kWh sales10%increase in earnings per Class A ordinary shareThe 20 MW Battery Energy Storage System(“BESS”)was commissionedThree out of the five generating units at the North Sound Road plant,totalling 68 MegaWatts(“MW”)of capacity,underwent a Life Cycle UpgradeCUC installed 57 EV c
28、harge points for public charging and 9 charge points for CUC use in 2024.Page|3Dear Shareholders,WeatCaribbean Utilities Company,Ltd.(“CUC”or the“Company”)have been focused on cost effective sustainable initiatives to exemplify our mission:To be a leader in the growth of our community by delivering
29、safe,reliable energy services at competitive costs and with respect to the environment while being a model corporate citizen and providing a fair return to our shareholders.It is our pleasure to report on the performance and?the twelve months ended December 31,2024(“Fiscal?Photo:Sheree L.Ebanks,Chai
30、rperson of the?J.F.Richard Hew,President&Chief Executive OfficerCaribbean Utilities Company,Ltd.2024 Annual Report During 2024,three out of the five generating units at the North Sound Road plant,totalling 68 MW of capacity,underwent a Life Cycle Upgrade.This upgrade will extend the engines useful l
31、ives,improve fuel efficiency and prepare the engines for dual fuel operation.The upgrade and commissioning of the remaining two units are expected to be completed in 2025.The supply and installation of indoor Gas Insulated Switchgear(“GIS”)at the Frank Sound Substation,replacing the existing tempora
32、ry arrangement,aims to facilitate the acceleration of load growth and the future integration of renewable energy sources in the East End of Grand Cayman.The Company completed the engineering,design and construction the end of 2024.The GIS is expected to be operational by end of March 2025.The rollou
33、t of CUCs Electric Vehicle(“EV”)Charging Network is underway.CUC installed 57 EV charge points for public charging and 9 charge points for CUCs use in 2024.The Companys focus is on higher speed charging stations,strategically located where people live and work.Environment,Social and Governance(“ESG”
34、)In November 2024,CUC released its 2024 Sustainability Report.This comprehensive report captures the Companys ongoing dedication to environmental stewardship,social responsibility,and economic sustainability,as well as its commitment to fostering a more sustainable future for Grand Cayman.The report
35、 can be accessed via the Companys website at www.cuc-.The Company continued to focus its efforts on reducing greenhouse gas emissions through many initiatives including but not limited to the high fuel efficiency performance of its modern power generation fleet,the utilization of the waste heat reco
36、very system and steam turbine producing electricity using waste heat,the conversion of 94%of all street lighting to Light Emitting Diodes and the purchase of renewable energy from the Bodden Town Solar 1,Ltd.s?5 megawatt(“MW”)solar farm,Customer Owned Renewable Energy(“CORE”)power generators and Dis
37、tributed Energy Resources(“DER”).?In April 2024,CUC developed its inaugural Green Financing Framework(the“Framework”),published in August 2024,to set standards for financing and refinancing projects through green financing instruments.The$50.0 million in Green Note proceeds are being used for energy
38、 efficiency,climate change adaptation,and clean transportation projects.Sustainable Fitch rated the Framework as Excellent,highlighting its alignment with international green financing principles and the Companys commitment to transparency.The Framework and its assessment are available on the Compan
39、ys website www.cuc-.Additionally,the Companys$80.0 million debt issuance,including the$50.0 million in Green Notes,won the 2024 Global Banking&Markets Latin America Award for Debt Deal of the Year Caribbean.Health and Safety The health and safety of all our employees,contractors,and members of the p
40、ublic remained paramount to the Company throughout 2024.During the year,the Company recorded no Lost Time Injuries.There were five minor medical injuries which resulted in an All Injury Frequency Rate of 2.3(represents the number of incidents per 200 000 hours worked)slightly lower than the 2023 rat
41、e of 2.4.This rate is influenced by injuries on the job that results in the loss of productive work time and which required medical treatment.CUC completed its Health and Safety Plan which included several focus areas such as training,mental health management initiatives,internal Health and Safety A
42、udit and the Contractor Workshop held during the year.The Company continues with its programmes?to address hazards and concerns within the workplace and strives to ensure that health and safety remains the core value of all employees.During the year,the Company conformed with the standard requiremen
43、ts of ISO 45001:2018 for which a Letter of Self-Declaration has been issued through the Internal Occupational Health&Safety Audit,led by an independent external consultant.Reliability,Resiliency and Customer Service CUC remains committed to excellence in customer service,concentrating on programs an
44、d projects designed to improve customer experiences,service delivery,and customer education.In November 2024,the Customer Satisfaction Survey result indicated a positive upward trend in both customer satisfaction and engagement with satisfaction rating of 73%compared to 70%in November 2023.The overa
45、ll satisfaction rating for the year is 72%with notable improvements in the ratings of customer interactions,quality and reliability of service,outage response and payment options.In 2024,the Company continued to prioritize customer service initiatives to build on the progress made in 2023.The focus
46、was on enhancing key elements of our Customer Service Plan to further refine digital processes and implement additional channels for communication and interaction with customers.The goal was to elevate the customer experience through the introduction of new services,such as live chat.Page|4During th
47、e year,the Company successfully introduced proactive mid-month consumption notifications for residential customers to enhance customer education.This initiative complements the Customer Connect tool,which is a free resource available on the Company website for all residential and small business clie
48、nts.This platform allows customers to conveniently monitor their daily energy usage,customize alerts for specific consumption levels,and manage their energy expenditures.During Fiscal 2024,an additional 10 MW of temporary generation capacity was added to the grid to support the base load needs.The t
49、emporary rental generation was commissioned during the third quarter of the year to provide a reserve margin sufficient to ensure acceptable levels of reliable service.Building on the success of the Reliability 2.0 Programme,which aimed to limit outages to a maximum of two hours per average customer
50、 per year consistent with North American standards,the Company transitioned its efforts to enhancing resiliency.This involves strengthening the power systems ability to withstand and recover from disruptions,particularly those caused by climate change.Throughout the year,the Company advanced key res
51、iliency projects,including the undergrounding of critical transmission lines.There were 18 named storms in the Caribbean region during 2024,the average,according to the USA National Weather Service is 10 per year.CUC seeks to ensure readiness in recognition of increasing storm activity.Human Resourc
52、esAt December 31,2024,CUCs full-time employees totalled 275,a 5%increase from December 31,2023.CUC maintains a stable employee base of which approximately 81%are Caymanians.The remaining employees represent 17 different countries from across the globe.In 2024,the overall employee engagement score wa
53、s 76%,exceeding our target of 74%and up 4 points from last year.The score is 10 points above industry benchmark with following notable improvement from prior year results:77%of employees said they would recommend CUC as great place to work and 82%are optimistic about the future.CUC also remains acti
54、vely involved in the Fortis Inc.s Diversity,Equity,and Inclusion initiatives.This involvement demonstrates the Companys commitment to promoting a culture of inclusivity and equal opportunities for all employees,regardless of their background or characteristics.CUC conducted instructor-led Respect in
55、 the Workplace training,which garnered much dialogue with employees on various issues.In terms of gender representation,CUC continues to attract women to its workforce.It has seen an increase in women joining the Company in technical roles.As of year end,approximately 22%of the workforce is female.I
56、nvestors in People(“IIP”)-Gold The Investors in People model plays a crucial role in CUCs operations as the Company continuously strives to develop and evaluate its workforce.The primary goal is to recruit,retain and develop the most talented individuals within the utility industry.CUC aims to be an
57、 employer of choice for its employees.In 2024,CUC was nominated for IIPs prestigious Overseas Employer of the Year Gold Award.This nomination is a testamentto its commitment to creating a positive and supportive work environment for all employees.Employee Training and Development Programmes The Comp
58、any recognizes the importance of investing in its employees and continues to provide a range of opportunities for growth and development.In Fiscal 2024,significant resources were allocated to both formal and informal training programs,workshops,and employee coaching initiatives.Training hours contin
59、ue to increase over prior years,demonstrating the Companys commitment to employee growth.Employees have expressed positive feedback,noting that the training sessions are both engaging and informative.Many have highlighted the practical skills gained,which could be directly applied to their roles.Tra
60、ining hours totalled 26,276,a 45%increase compared to 18,130 training hours recorded in 2023.We are pleased to have four power line technician apprentices who successfully completed their first year Fortis Alberta training with high scores!Congratulations Kyle Smith,Nicholas Manning,Romaine Thomas,a
61、nd Ralston Ebanks.Additionally,Joshua Gonzalez and Deondre Lyn successfully completed their year 2 apprenticeship training with Fortis Alberta.This year,Joni Kirkconnell,Director of HR&Corporate Services,was a participant in the Fortis Leadership Lab,a cohort of emerging leaders who completed a year
62、long internal leadership development program.The program aimed to enhance business acumen and prepare emerging leaders for successful long-term careers in the energy sector.Page|5Caribbean Utilities Company,Ltd.2024 Annual ReportCaribbean Utilities Company,Ltd.2024 Annual Report Recognition The Comp
63、any recognizes the importance of rewarding our employees for their outstanding contribution and dedication.To foster a positive work environment and promote employee satisfaction,we consistently implemented various rewards and recognition efforts throughout the year through our peer-to-peer nominati
64、on programme recognizing each other for exhibiting the various behaviours in line with the Company values.This year,the Company honoured 27 employees with long service awards for their contributions to the Company.These individuals have dedicated their careers to the Company with a combined 615 year
65、s of service ranging from 10 to 40 years.At this ceremony,Geraude Holness received his 40 Year Long Service Award.The following employees were recognized during the year:Jarron Conolly(Employee of the Year);Shawn Myles(Supervisor of the Year);Barton Solomon and Demarno Edwards(Excellence in Safety);
66、Edlin Moore(Individual)-Otis Jackson Golden Wrench Award;and Nathaniel Augustine(Individual)and Energy Delivery Operations(Department)Pedro Echenique Golden Bucket Award;Bruce Prendergast,Deleon Boyden,Neil Murray,Earlton Bramble,Jessie Bodden,Leandru Ebanks,Chrisoma Muirhead,Aaron Miller and Weiry
67、Tionko(Unsung Hero);Barry Payne,Dennis Salazar and The Accounts Payable Team(Cost Saver Award);and Brittany Myrie,Ignatius Gouveia,Weiry Tionko,Andrew Carter,James Moore,Enyer Rivers and Christian Andrews,Carlos Rivers and Anet Ferguson,Peter Williams,Purdy Gouveia and Donna Gayle(Living our Values)
68、.The Jeff Broderick Bright Spark Award went to Shamala Miller,Richard Solomon,Careen Craig,Ignatius Gouveia and Barton Solomon.This year a total of 11 employees qualified for the Wellness Champions Award in the Bronze,Silver and Gold categories.Community Involvement The Community Involvement Program
69、me continues to provide the opportunity for employees to give their time and talent to the Cayman community through volunteerism.Some of the projects and events that volunteers took part included Meals on Wheels,activities with the Lighthouse School,Earth Day Clean-ups and support for the Sunrise Ad
70、ult Training Centre.The Company continues to sponsor educational programmes aimed at providing the youth of the Cayman Islands with unique opportunities to learn and develop themselves.In 2024,CUC sponsored a computer coding camp in partnership with local entity Code(Cayman).The weeklong camp allowe
71、d participating children learn different coding techniques.The Company also sponsored a young Caymanian,Joshua McField to attend the COP28 summit held in Dubai.This experience allowed Joshua to listen and learn firsthand from various experts on practical insights for a sustainable future.The Company
72、 continued to sponsor various sports events throughout the community,namely the CUC CARIFTA Trials,the CUC 800m and 400m Sea Swim and the Primary Football and Cricket Leagues.CUC remains committed to the ongoing development of the community in which we live and work.?Future involvement in cleaner en
73、ergy The Cayman Islands economy continues to show strong and stable positive growth with new customers and developments in the construction sector driving the Companys 3%kWh sales growth.The Cayman Islands Economic and Statistics Office forecasted Gross Domestic Product to expand by 2.8%during 2024.
74、In the coming years,we anticipate a substantial rise in demand for electricity infrastructure and new customer connections,necessitating further investments in critical infrastructure to meet this growing need.The Company is uniquely positioned to support this growth and help the Cayman Islands tran
75、sition to a low-carbon economy.During the past two years,the Company has invested approximately$200 million in infrastructure to ensure the delivery of safe,reliable,affordable and sustainable electricity to our customers.Amid the rising physical risk in the region due to climate change,the Company
76、is dedicated to enhancing resiliency while continuing to uphold reliability and deliver excellent customer service.Reflecting on 2024,we are proud of the remarkable achievements that would not have been possible without the dedication and hard work of our employees.We extend our sincere thanks to ou
77、r employees and the Board for their steadfast support.As we look to the future,we are excited about the opportunities ahead,powered by cleaner renewable energy.We are committed to leading the energy transition and making a positive impact in the Cayman Islands.Signed“Sheree L.Ebanks”Sheree L.Ebanks
78、Chairperson of the Board of Directors Signed“J.F.Richard Hew”J.F.Richard Hew President&Chief Executive Office Page|6Caribbean Utilities Company,Ltd.2024 Annual Report Managements Discussion and Analysis The following managements discussion and analysis(“MD&A”)should be read in conjunction with the C
79、aribbean Utilities Company,Ltd.(“CUC”or the“Company”)consolidated financial statements and related notes for the year ended December 31,2024(the“2024 Financial Statements”).The material has been prepared in accordance with Canadian Securities Administrators National Instrument 51-102-Continuous Disc
80、losure Obligations(“NI 51-102”)relating to the MD&A and is available under the Companys profile on SEDAR+at together with the Companys annual information form for the year ended December 31,2024,which contains additional information relating to the Company.The accounting practices,which are disclose
81、d in the notes to the 2024 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 of providing services,including a fair return
82、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,results,circumstances,performance or expectati
83、ons 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“expects”,“anticipates”,“plans”,“believes”,“estima
84、tes”,“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 assumptions and managements beliefs,estimates and op
85、inions,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 statements are described in the MD&A in the sect
86、ions 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 results may vary significantly from those expecte
87、d 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.Readers are cautioned that such information ma
88、y 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.On May,31,2022,the Ontario Securities Commission issued a relief or
89、der which permits the Company to continue 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
90、of the Companys financial year that commences 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 R
91、ate-regulated Standard”)and(b)two years after the IASB publishes a final version of the Mandatory Rate-regulated Standard.Canadian securities laws allow a reporting issuer to prepare and file its financial statements in accordance with U.S.GAAP by qualifying as a U.S.Securities and Exchange Commissi
92、on(“SEC”)registrant.Without the OSC relief order,the Company would be required to become an SEC registrant in order to continue reporting under U.S.GAAP,or adopt IFRS.The Company is currently reviewing the implications of this order.Financial information is presented in United States dollars unless
93、otherwise specified.The 2024 Financial Statements and MD&A in this Annual Report were approved by the Audit Committee and the Board of Directors.February 14,2025 Page|7Caribbean Utilities Company,Ltd.2024 Annual Report Financial and Operational Highlights ($thousands,except Basic Earnings,Dividends
94、Paid and where otherwise indicated)Year Ended December 31,2024 Year Ended December 31,2023 Change%Change Electricity Sales Revenues 121,913 114,220 7,693 7%Fuel Factor 163,615 166,573(2,958)(2%)Renewables 6,155 6,432(277)(4%)Z-Factor*1,999-1,999 100%Total Operating Revenues 293,682 287,225 6,457 2%P
95、ower Generation*174,972 177,852(2,880)(2%)Depreciation 44,282 41,119 3,163 8%Other Expenses 33,938 29,837 4,101 14%Total Operating Expenses 253,192 248,808 4,384 2%Net Operating Income 40,490 38,417 2,073 5%Net Earnings for the Year 42,687 38,660 4,027 10%Cash Flow related to Operating Activities 91
96、,464 80,781 10,683 13%Per Class A Ordinary Share:Basic Earnings 1.08 1.00 0.08 8%Dividends Paid 0.735 0.715 0.020 3%Total Customers 34,280 33,611 669 2%Total Full-Time Employees 275 263 12 5%Customers per Employee(#)125 131(6)(5%)System Availability(%)99.97 99.97-Peak Load Gross(MW)128.0 124.1 3.9 3
97、%Millions of kWh:Net Generation 760.2 735.4 24.8 3%Renewable Energy Generation 22.1 22.7(0.6)(3%)Total Energy Supplied 776.9 753.6 23.3 3%Kilowatt-Hour Sales 749.3 727.0 22.3 3%Sales per Employee 2.72 2.76(0.04)(1%)*The Z-Factor mechanism is designed to recover expenses and investments that are outs
98、ide of the T&D Licence regular rate setting process.The expense or investment is recovered through a Z-factor rate surcharge as approved by OfReg.During 2024,projects with approved Z-Factor mechanism were completed and applicable revenue was recorded against Regulatory Asset pending approval of the
99、Z-Factor Rate by the regulator.*All amounts from Fuel Factor and Renewables revenues are included within the Power Generation expense as they are passed through to customers without mark-up as a per kWh charge.Letitia T.Lawrence Vice President Finance,Corporate Services&Chief Financial Officer Page|
100、8Caribbean Utilities Company,Ltd.2024 Annual Report Corporate and Regulatory Overview The principal 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 an
101、d a 25-year non-exclusive Generation Licence(together,the“Licences”)granted by the Cayman Islands Government(the“Government”,“CIG”).The T&D Licence,which expires in April 2028,contains provisions for an automatic 20-year renewal and the Company has reasonable expectation of renewal until April 2048.
102、The Generation Licence expires in November 2039.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 petroleum industries in the Cayman Is
103、lands.OfReg assesses CUCs performance against the performance standard expectations in accordance with the Utility Regulation and Competition Office Act(2024).Performance standards provide a balanced framework of potential penalties or rewards compared to historical performance in the areas of plann
104、ing,reliability,operating and overall performance.Standards include“zones of acceptability”where no penalties or rewards would apply.A licence fee of$2.9 million per annum and a regulatory fee of$1.4 million per annum are payable to the Cayman Islands Government in quarterly instalments.Both fees ap
105、ply only to customer billings with consumption over 1,000 kWh per month as a pass-through charge rate.Customer 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 2023 was 7.76%(2022:7.0
106、0%).CUCs RORB for 2024 was targeted in the 8.25%to 10.25%range(2023:7.50%to 9.50%).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 f
107、ees are billed as separate line items.Base rates are subject to an annual review and adjustment each June through the RCAM.Following review by OfReg,the Company increased base rates by 3.2%,with an effective date of June 1,2024.This increase is a result of the applicable RORB and the combined change
108、s in the United States of America(“US”)and the Cayman Islands consumer price indices,adjusted to exclude food and fuel.The Licenses also contain the provision for the Z-Factor mechanism designed to recover expenses and investments that are outside of the T&D License regular rate setting process.The
109、expense or investment is recovered through a Z-factor rate surcharge as approved by OfReg.In addition to the RORB requirements of the T&D Licence,CUC may periodically,but at least every five years,propose rebalanced and restructured rates.These proposals will consider the results of any cost of serv
110、ice study(“COSS”)completed prior to the proposed rate adjustment.Any such adjustments must be revenue-neutral to the base rate adjustment as determined by the RCAM.An independent,comprehensive,allocated COSS was completed and submitted to the regulator for review in November 2023,with the last COSS
111、conducted by an independent consultant completed in 2018.An allocated COSS assigns cost responsibility between rate classes based on various relative characteristics,such as the number of customers,energy sales,impact on peak demands,and revenues.For demand allocation factors,extensive analysis of c
112、ustomer load data was performed using interval usage readings collected from the Companys advanced metering infrastructure meters.The total of all allocated revenue requirements represents the allocated cost of service,or the net revenue requirement for the base rates of each rate class.OfReg has no
113、t approved the proposed rate rebalancing recommended by the COSS.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.The difference between the calculated rate increase and the act
114、ual 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 write-off destroyed assets over the remaining life
115、of the asset that existed at the time of destruction.Z-Factor rate changes will be required for insurance deductibles and other extraordinary expenses.All fuel,lubricating oil,and renewables costs are passed through to customers without mark-up as a per kWh charge.Page|9Caribbean Utilities Company,L
116、td.2024 Annual Report Deferral Mechanism In April 2022,the Company submitted its annual rate adjustment to OfReg for review.The required rate increase as confirmed by OfReg was 5.4%,with an effective date of June 1,2022.Due to economic conditions and rising fuel prices,OfReg approved the Companys pr
117、oposal 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 which was recovered within
118、 two years through a recovery rate of$0.0019 per kWh.The amount recorded as a regulatory asset for the year ended December 31,2022 was$2.8 million and was fully recovered from customers as of December 31,2024.DataLink,Ltd.CUCs wholly-owned subsidiary,DataLink,Ltd.(“DataLink”),was incorporated under
119、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 authority was assumed by OfReg,on March 28
120、,2012.DataLink is subject to regulation by 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 Maintenance agreement;2.The Pole Attachment a
121、greement;and 3.The Fibre Optic agreement.Consolidation Accounting Policy The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary DataLink.All intercompany balances and transactions have been eliminated on consolidation.Page|10 Caribbean Utilities Com
122、pany,Ltd.2024 Annual Report Results of Operations Operating Revenues Sales in kilowatt-hours(“kWh”)for the year ended December 31,2024(“Fiscal 2024”)were 749.3 million kWh,an increase of 22.3 million kWh or 3%compared to 727.0 million kWh for the year ended December 31,2023(“Fiscal 2023”).The increa
123、se was driven by the 2%growth in overall customer numbers and an increase in average consumption of residential and large commercial customer categories during 2024.The average monthly temperature for Fiscal 2024 was 83.8 degrees Fahrenheit when compared to 84.0 degrees Fahrenheit in Fiscal 2023.The
124、 average rainfall for Fiscal 2024 was 6.1 inches when compared to 4.1 inches for Fiscal 2023.Despite the relatively cooler weather and increased rainfall,a record peak load of 128.0 MW was experienced on September 17,2024.Operating revenues for Fiscal 2024 totalled$293.7 million,an increase of$6.5 m
125、illion from$287.2 million for Fiscal 2023.The increase in operating revenues was due to higher electricity sales and Z-factor2 revenue recognized in 2024 partially offset by lower fuel factor revenues.Electricity sales revenues increased by$7.7 million for Fiscal 2024 to$121.9 million when compared
126、to electricity sales revenues of$114.2 million for Fiscal 2023.This increase is primarily driven by the 3%kWh sales growth and 3.2%base rate increase effective June 1,2024.Z-Factor revenue relates to the completion of the Battery Energy Storage System(“BESS”)and the L2 Resiliency projects.These proj
127、ects were approved for the Z-Factor Mechanism by the regulator.Fuel factor revenues for Fiscal 2024 totalled$163.6 million,a$3.0 million decrease from the$166.6 million in fuel factor revenues for Fiscal 2023.The net decrease was due to the 4%decrease in the average Fuel Cost Charge partially offset
128、 by the 3%increase is kWh sales.The average Fuel Cost Charge rate charged to consumers for Fiscal 2024 was$0.23 per kWh,compared to the Fuel Cost Charge rate of$0.24 per kWh for Fiscal 2023.The average fuel price per imperial gallon(“IG”)used to determine the fuel cost charge rate to consumers for t
129、he year ended December 31,2 The Z-Factor mechanism is designed to recover expenses and investments that are outside of the T&D License regular rate setting process.The expense or investment is recovered through a Z-factor rate surcharge as approved by OfReg.During 2024,projects with approved Z-Facto
130、r mechanism were completed and applicable revenue was recorded against Regulatory Asset pending approval of the Z-Factor Rate by OfReg.These projects are required for maintaining and improving the reliability and safety of CUCs services.?Sales and Customer Highlights Total CUC customers and revenue
131、only Year Ended December 31,2024Year Ended December 31,2023%Change Customers (fully stated,not in thousands)Residential 29,475 28,874 2%General Commercial 4,694 4,627 1%Large Commercial 111 110 1%Total Customers 34,280 33,611 2%Sales(in thousands kWh)Residential 406,886 396,680 3%General Commercial
132、154,373 152,924 1%Large Commercial 183,819 172,521 7%Other(street lights,etc)4,259 4,898-13%Total Sales 749,337 727,023 3%Average Monthly Consumption Per Customer(kWh)Residential 1,162 1,153 1%General Commercial 2,760 2,771-Large Commercial 139,083 138,039 1%Revenues(in thousands of$)Residential 65,
133、254 61,582 6%General Commercial 28,898 27,559 5%Large Commercial 26,622 23,963 11%Fuel Factor 163,615 166,573-2%Renewables 6,155 6,432-4%Z-Factor 1,999-100%Other(street lights etc.)1,139 1,116 2%Total Operating Revenues 293,682 287,225 2%Residential54%General Commercial21%Large Commercial24%2024 kWh
134、 SalesPage|11 Caribbean Utilities Company,Ltd.2024 Annual Report 2024 was$3.90,compared to$4.24 for the year ended December 31,2023.Fuel Factor revenues consist of charges from diesel fuel and lubricating oil costs,which are passed through to consumers on a two-month lag basis with no mark-up.The re
135、newables 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 Purchase Agreement(“PPA”)wit
136、h Bodden Town Solar 1,Ltd.for a 25-year term.Operating Expenses Total operating expenses for Fiscal 2024 increased by$4.4 million to$253.2 million from$248.8 million for Fiscal 2023.The primary factors contributing to the increase in operating expenses were increases in depreciation,general and admi
137、nistration costs and maintenance costs partially offset by a decrease in power generation costs.The primary reasons for the changes in the Companys operating expenses for the years ended December 31,2023 and December 31,2024 are as follows:Significant Changes in Operating Expenses ($in thousands)Ite
138、m Year Ended December 31,2024 Year Ended December 31,2023 Change%Change Explanation Power Generation 174,972 177,852(2,880)-2%Decrease due to 8%decrease in averagefuel cost partially offset by 3%increase inkWh generated.Depreciation of Property,Plant and Equipment(“PP&E”)44,282 41,119 3,163 8%Increa
139、se due to the completed capitalprojects during the period partially offsetby the 25-year life extension resultingfrom the life cycle upgrades of twogenerating units.General and Administration(“G&A”)14,406 12,615 1,791 14%Increase mainly due to higher insurancepremiums,employee benefits,legal andcomp
140、ensation cost partially offset byhigher General Expenses Capitalized.Maintenance 6,131 4,993 1,138 23%Increase due to higher compensation costand higher generation material costspartially offset by lower labour recharges.Power generation expenses were as follows:Power Generation Fuel,Lubricating Oil
141、 and Renewables costs stated net of deferred charges($thousands)Year Ended December 31,2024 Year Ended December 31,2023Change%ChangeFuel Costs 161,331 164,182(2,851)-2%Lubricating Oil Costs(net of deferred lubricating oil costs)2,284 2,391(107)-4%Renewables Costs(net of deferred renewables costs)6,1
142、55 6,432(277)-4%Other Generation Expenses 5,202 4,847355 7%Total Power Generation expenses 174,972 177,852(2,880)-2%The Companys average price per imperial gallon(“IG”)of fuel for the year ended December 31,2024 decreased by 9%to$3.76 in comparison to$4.11 for the twelve months ended December 31,202
143、3.The Companys average price per IG of lubricating oil for the twelve months ended December 31,2024,decreased by 1%to$16.26 when compared to$16.38 for the twelve months ended December 31,2023.Page|12Caribbean Utilities Company,Ltd.2024 Annual ReportTotal energy supplied to the grid for Fiscal 2024 w
144、as 776.9 million kWh,a 3%increase when compared to 753.6 million kWh for Fiscal 2023.Total energy supplied is the net amount of energy available to be transmitted and distributed for consumer use,including energy provided by renewable resources such as the CORE and DER programmes,and Bodden Town Sol
145、ar 1,Ltd.s Solar Farm.Net fuel efficiency for Fiscal 2024 of 18.60 kWh per IG slightly decreased when compared to net fuel efficiency for Fiscal 2023 of 18.63 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 Track
146、er Account(see Note 8 of the Notes to the Annual Consolidated Financial Statements for further details)and will be recovered from consumers.Consumer ServicesIn accordance with its Allowance for Credit Losses policy,the Company maintains an accumulated provision for uncollectible customer accounts re
147、ceivable that is estimated based on known accounts,historical experience and other currently available information,including the economic environment.Trade receivables,less allowances for credit losses and consumer deposits as at December 31,2024 were$9.5 million,a decrease of$4.3 million when compa
148、red to$13.8 million as at December 31,2023.This decrease was driven by the decrease in current customer receivables and decrease in allowance for credit losses partially offset by an increase in consumer deposits.The decrease in Allowance for Credit Losses was due to recovery of billing in arrears r
149、elated to CCTV pole attachments and write-off of long outstanding receivables.Customer deposits as at December 31,2024 totalled$14.9 million,an increase of$1.0 million when compared to customer deposits of$13.9 million as at December 31,2023.The increase in consumer deposits was due tothe increase i
150、n consumer numbers,increase in the average customer bill and deposits from large developments.Trade and Other Receivable($thousands)As at December 31,2024As atDecember 31,2023Change%ChangeCurrent20,17025,625-5,455-21%Past due 31-60 days1,3541,2371179%Past due 61-90 days346125221177%Past due over 90
151、days4,5843,5331,051 30%Total Trade and Other Receivable26,45430,520-4,066-13%Less:Allowance for Credit Losses(2,058)(2,817)75927%Less:Consumer Deposits(14,859)(13,889)-970-7%Net of Allowance of Credit Losses and Customer Deposits9,537 13,814-4,277-31%33.544.55Comparative Average Fuel Price(In USD Pe
152、r IG)20242023Page|13 Caribbean Utilities Company,Ltd.2024 Annual Report Other Income and Expenses Other income and expenses were as follows:Other Income&Expenses ($thousands)Year Ended December 31,2024 Year Ended December 31,2023 Change%Change Total Interest Costs Allowance for Funds Used During Con
153、struction(“AFUDC”)(20,227)14,373(18,443)11,988(1,784)2,385-10%20%Total Finance Charges(5,854)(6,455)601 9%Foreign Exchange Gain 2,320 2,253 67 3%Other Income 5,731 4,445 1,286 29%Total Net Other Income 2,197 243 1,954 804%Finance charges for Fiscal 2024 totalled$5.9 million,a decrease of$0.6 million
154、 when compared to$6.5 million for Fiscal 2023.The T&D Licence allows for the capitalisation of 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 reviewe
155、d annually.During 2024,the cost of capital was 9.25%(2023:8.5%).The AFUDC amount for Fiscal 2024 totalled$14.4 million,an increase of$2.4 million from$12.0 million for Fiscal 2023.Foreign exchange gains and losses are the result of monetary assets and liabilities denominated in foreign currencies th
156、at are translated into United States dollars at the exchange rate prevailing on the date of the balance sheet.Revenue and expense items denominated in foreign currencies are translated into United States dollars at the exchange rate prevailing on the transaction date.Foreign exchange gains totalled$
157、2.3 million for Fiscal 2024 comparable to$2.3 million for Fiscal 2023.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,performance rewards as part of the T&D Licence and other miscellaneo
158、us income.Other income totalled$5.7 million for Fiscal 2024,a$1.3 million increase from$4.4 million for Fiscal 2023.This increase was primarily attributable to income from recovery of billing in arrears related to CCTV pole attachments and higher income from pipeline operations.Revenues from DataLin
159、k recorded in other income for Fiscal 2024 amounted to$2.1 million,comparable to$2.1 million for Fiscal 2023.Earnings Operating income for the year ended December 31,2024 totalled$40.5 million,a$2.1 million or 5%increase from operating income of$38.4 million for the year ended December 31,2023.This
160、increase was primarily attributable to a 3%increase in kWh sales,3.2%base rate increase effective June 1,2024 and the Z-Factor revenue for approved projects.These factors were partially offset by higher depreciation,general and administrative expenses and maintenance costs.Net earnings for Fiscal 20
161、24 were$42.7 million,a$4.0 million or 10%increase from net earnings of$38.7 million for Fiscal 2023.This increase is primarily attributable to higher operating income,higher net other income and lower finance charges.After the adjustment for dividends on the preference shares of the Company,earnings
162、 on Class A Ordinary Shares for Fiscal 2024 were$41.7 million,or$1.08 per Class A Ordinary Share,as compared to$37.7 million,or$1.00 per Class A Ordinary Share,for Fiscal 2023.The Company calculates earnings per share on the weighted average number of Class A Ordinary Shares outstanding.The weighted
163、 average number of Class A Ordinary Shares outstanding were 38,756,510 and 37,779,724 for the years ended December 31,2024 and December 31,2023,respectively.Page|14Caribbean Utilities Company,Ltd.2024 Annual ReportThe EconomyFinancial services is one of the two main industries of the Cayman Islands.
164、The table below itemises trends in some of the key financial sectors:Financial services is one of the two main industries of the Cayman Islands.The table below itemizes trends in some of the key financial sectors:Indicators for the Financial ServicesIndustry(for the years ended December 31)202420232
165、02220212020Bank Licences798794101110Mutual Funds12,85813,00812,99512,71911,312Mutual Fund Administrators6974747576Registered Companies118,443119,626119,12899,327111,568Captive Insurance Companies721708686686679The tourism sector is the second main pillar of the Cayman Islands economy.In 2024,the Cay
166、man Islands experienced steady growth in tourism.Both stayover and cruise arrivals continued to rise;however,total visitation decreased by 11%compared to the same period in 2023.The following table presents statistics for tourist arrivals in the Cayman Islands for the years ending December 31:Touris
167、t Arrivals to the Cayman Islands(for the years ended December 31)20242023 202220212020By Air437,842429,284 180,6242,212121,819By Sea1,076,8751,270,981 426,293-538,140Total1,514,7171,700,265 606,9172,212659,959All data is sourced from the Cayman Islands Government,Cayman Islands Economics&Statistics
168、Office,Cayman Islands Monetary Authority andCayman Islands Department of Tourism(www.gov.ky,www.eso.ky,.ky,www.caymanislands.ky).Capital ResourcesTo ensure access to capital,the Company targets a long-term capital structure of approximately 45%equity,including preference shares,and 55%debt.The Compa
169、nys objective is to maintain investment-grade credit ratings.The Company sets the amount of capital in proportion to risk.The debt to equity ratio is managed through various methods such as the Rights Offering(as defined below)and the Companys share purchase plans.In July 2024,the Cayman Islands Eco
170、nomics and Statistics Office published the Cayman Islands Consumer Price Index(“CPI”)Report for Second Quarter of 2024.The average CPI in the Second Quarter 2024 was 132.7,higher by 1.7%in comparison to Second Quarter 2023.This represents a net increase in the overall index,driven mainly by higher p
171、rices of communication(10.3%)and education(9.4%)partially offset by the decline in Clothing&Footwear(-3%)and Transport sector(-3%).When compared to the previous quarter ended March 2024,the Second Quarter 2024 CPI increased by 0.1%.Page|15 Caribbean Utilities Company,Ltd.2024 Annual Report Certain o
172、f the Companys long-term debt obligations have covenants restricting the issuance of additional debt such that consolidated debt cannot exceed 65%of the Companys consolidated capital structure,as defined by short-term and long-term debt agreements.As at December 31,2024,the Company was in compliance
173、 with all debt covenants.The Companys capital structure is presented in the following table:Capital Structure ($thousands)December 31,2024%December 31,2023%Total Debt 397,950 50 389,145 55 Shareholders Equity 393,374 50 324,742 45 TOTAL 791,324 100 713,887 100 The change in the Companys capital stru
174、cture between December 31,2024 and December 31,2023 was a net effect of the$80.0 million Senior Unsecured Notes issued in May 2024,the principal payments of$19.8 million made on the Companys Senior Unsecured Notes and the Rights Offering during the year.On May 15,2024,the Company completed the priva
175、te placement of$80.0 million aggregate principal amount of 6.17%and 6.37%Senior Unsecured Green Notes in the amounts of$40.0 million and$10.0 million due May 15,2039 and May 15,2049,respectively,and 6.37%Senior Unsecured Notes in the amount of$30.0 million due May 15,2049.The debt offering was priva
176、tely placed with institutional investors.Proceeds from the offering were used to repay short-term indebtedness and to finance ongoing additions and upgrades to CUCs generation,transmission,and distribution systems On September 20,2024,the Company announced the commencement of a rights offering(the R
177、ights Offering).Under the Rights Offering,the Company issued rights(“Rights”)to eligible holders of record of outstanding Class A Ordinary Shares(“Eligible Shareholders”)at the close of business on September 27,2024(the“Record Date”)to subscribe for additional Class A Ordinary Shares.Each Eligible S
178、hareholder was entitled to receive one right for each Class A Ordinary Share held on the Record Date.Every 10 Rights entitled the holder to acquire one Class A Ordinary Share of the Company upon payment of the subscription price of$13.41 per Class A Ordinary Share prior to the expiration of the Righ
179、ts on October 31,2024.Eligible Shareholders who exercised all of their Rights were entitled to acquire additional Class A Ordinary Shares,if any,which were not subscribed for by other holders of Rights pursuant to an additional subscription privilege(the“Additional Subscription Privilege”).The Compa
180、ny entered into a standby commitment agreement(the“Standby Agreement”)with Fortis Energy Caribbean Inc.(“FECI”)(previously known as Fortis Energy Bermuda Ltd.),a wholly-owned subsidiary of Fortis Inc.and the Companys controlling shareholder,pursuant to which FECI agreed,subject to the terms and cond
181、itions of the Standby Agreement,to purchase all Class A Ordinary Shares issuable on the exercise of Rights which were not acquired by other holders of Rights or pursuant to the Additional Subscription Privilege,such that the maximum number of Class A Ordinary Shares to be issued under the Rights Off
182、ering were issued.The Rights Offering closed on November 4,2024.The Company raised gross proceeds of approximately$51.3 million through the issuance of a total of 3,822,298 Class A Ordinary Shares and FECI purchased 3,147,201 Class A Ordinary Shares under the Rights Offering and Standby Agreement.Fo
183、llowing completion of the Rights Offering,FECI owns approximately 60%of the issued and outstanding Class A Ordinary Shares on a non-diluted basis,which percentage holding increased by approximately 2%as a result of the Rights Offering.The proceeds of the Rights Offering are being used to finance alt
184、ernative energy projects,ongoing additions and upgrades to CUCs generation,transmission,and distribution systems,and for general corporate purposes.The Companys credit ratings under Standard&Poors(“S&P”)and the DBRS Morningstar(“DBRS”)are as follows:DBRS A(low)/Stable S&P BBB+/Negative The S&P ratin
185、g is in relation to long-term corporate credit and senior unsecured debt while the DBRS rating relates to senior unsecured debt.Page|16 Caribbean Utilities Company,Ltd.2024 Annual Report In February 2025,DBRS Morningstar affirmed the Companys“A”credit rating while maintaining the categorization of l
186、ow with a stable trend.The current ratings reflect(1)CUCs key credit metrics for 2023 and the first nine months of 2024 were strong within the current rating category;(2)cash flow stability that continues to benefit from CUC having no exposure to fuel price risk and only reasonable regulatory lag as
187、sociated with the recovery of non-fuel and non-regulatory costs as well as capital spending;and(3)the Companys liquidity that remains solid,reflecting sizable credit facilities,and minimal long-term debt due in the near term.In June 2024,reflecting the outlook for Fortis Inc.,S&P affirmed CUCs negat
188、ive rating due to physical risks for a relatively small,island-based utility that is vulnerable to natural disasters following its risk assessment in the wake of the Hawaiian wildfires of August 2023.S&P has assessed the elevated exposure to physical events,including storms,hurricanes and flooding a
189、s an effect of climate change.Liquidity The primary sources of liquidity and capital resources are net funds generated from operations,debt issuances,equity issuances,and bank credit facilities.These sources are used primarily to satisfy capital and intangible asset expenditures,service and repay de
190、bt,and pay dividends.The following table outlines the summary of cash flow for Fiscal 2024 compared to Fiscal 2023:Cash Flows ($thousands)Year Ended December 31,2024 Year Ended December 31,2023 Change%Change Beginning Cash 3,987 7,948(3,961)-50%Cash Provided By/(Used In):Operating Activities 91,464
191、80,781 10,683 13%Investing Activities(100,434)(101,215)781-1%Financing Activities 25,183 16,473 8,710 53%Ending Cash 20,200 3,987 16,213 407%Operating Activities:Cash flow provided by operations,after working capital adjustments,for Fiscal 2024,was$91.5 million,an increase of$10.7 million from$80.8
192、million for Fiscal 2023.This increase was due to the movement in regulatory deferrals which include recovery of deferred revenue and movement in accounts receivable,partially offset by movement in accounts payable and inventories.Investing Activities:Cash used in investing activities for Fiscal 2024
193、 totalled$100.4 million,a decrease of$0.8 million from$101.2 million for Fiscal 2023.This decrease was primarily due to slightly lower capital expenditures during Fiscal 2024.Significant projects include Life Cycle Upgrade of three generating units,transmission and distribution upgrades and the Batt
194、ery Energy Storage System which were completed during the year.Financing Activities:Cash provided by financing activities totalled$25.2 million for Fiscal 2024,an increase of$8.7 million when compared to$16.5 million of cash provided by financing activities for Fiscal 2023.The net increase was from
195、the proceeds of long-term debt and the Rights Offering partially offset by repayment of short-term debt,loan repayments and dividend payments during 2024.Cash Flow Requirements:The Company expects that operating expenses and interest costs will generally be paid from the Companys operating cash flow
196、s,with residual cash flows available for capital expenditures and dividend payments.Borrowings under credit facilities 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
197、 combination of proceeds from operating cash,debt and equity transactions.The Company expects to be able to source the cash required to fund its 2025 capital expenditure programme(see the“Business Risks”section of this MD&A for details regarding the Companys liquidity risk).Page|17 Caribbean Utiliti
198、es Company,Ltd.2024 Annual Report Credit Facilities The Company currently has$82.5 million of unsecured credit financing facilities with Scotiabank&Trust(Cayman)Limited(“Scotia”)and Royal Bank of Canada(“RBC”).The financing facilities are comprised of:Short-Term Financing($thousands)Provided by Scot
199、ia:MasterCard Agreement 500 Operating,Revolving Line of Credit 10,000 Letter of Credit 13,000 Standby Loan 7,500 Demand Loan Facility-Interim Funding of Capital Expenditures 51,000 Total 82,000 Provided by RBC:Corporate Credit Card Line 500 Total 82,500 As at December 31,2024,$82.0 million was avail
200、able under the Companys credit facilities(2023:$22.4 million).Contractual Obligations As at December 31,2024,the contractual obligations of the Company over the next five years and periods thereafter are outlined in the following table:Contractual Obligations ($thousands)Total 5 years Total Debt 399
201、,611 19,935 37,727 44,593 297,356 Long-Term Debt Interest 235,009 19,265 36,203 33,289 146,252 Total 634,620 39,200 73,930 77,882 443,608 Power Purchase Agreement(“PPA”)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
202、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 does not qualify as a derivative.Fuel Purchase Obligation The Company has a primary fuel supply contract with RUBiS Cayman Islands Limited(“RU
203、BiS”).Under the agreement,the Company is committed to purchase approximately 60%of its diesel fuel requirements for its generating plant from RUBiS.The Company also has a secondary fuel supply contract with Sol Petroleum Cayman Limited(“Sol”)and is committed to purchase approximately 40%of the Compa
204、nys fuel requirements for its generating plant from Sol.In October 1,2024,the Company executed new fuel supply contracts with RUBis and Sol,each with a term of 36 months.Both contracts qualify for the Normal Purchase Normal Sale exemption under ASC 815 and do not qualify as derivatives.Page|18 Carib
205、bean Utilities Company,Ltd.2024 Annual Report Financial Position The following table is a summary of significant changes to the Companys balance sheet,when comparing Fiscal 2024 to Fiscal 2023.Significant Changes in Balance Sheet ($thousands)Balance Sheet Account Increase/(Decrease)($thousands)Expla
206、nation Cash and Cash Equivalents 16,213 Net increase due to cash provided by operating activities of$91.5 million and financing activities of$25.2 million partially offset by cash used in investing activities of$100.4 million.Accounts Receivable(3,307)Decrease due to lower fuel cost charged to custo
207、mers,partially offset by higher kWh electricity sales during the year.Regulatory Assets(1,391)Decrease due to lower fuel cost which are passed through to customers without mark-up and the recovery of 2022 deferred revenue.These factors were partially offset by the increase in deferred temporary gene
208、ration lease and accrued Z-Factor revenues.Regulatory Liabilities 3,192 Increase due to over collection for licence and regulatory fees.Property,Plant and Equipment 55,491 Increase due to capital expenditures for the period,partially offset by an increase in accumulated depreciation.Other Assets 4,9
209、55 Increase due to the extension of Lease for temporary generators and an additional 10MW temporary generator leased during the year.Accounts Payable and Accrued Expenses(5,035)Decrease mainly attributable to lower fuel costs payable.Bank Overdraft(8,637)Decrease due to repayment of an overdraft fac
210、ility.Short term debt (51,000)Decrease due to repayment of short-term debt of$51 million.Long-Term Debt 59,805 Increase due to long-term debt issuance of$80.0 million in May 2024 partially offset by the principal payments made on the Companys Senior Unsecured Notes in Fiscal 2024 Share Premium 54,77
211、6 Increase due to the issuance of 4,113,826 Class A Ordinary Shares through the Rights Offering and share purchase plans.Retained Earnings 12,958 Increase due to net earnings for the year of$42.7 million,offset by dividend payments on the Class A Ordinary Shares of$28.7 million and Class B Preferenc
212、e Shares of$1.0 million.Page|19 Caribbean Utilities Company,Ltd.2024 Annual Report?Capital Expenditures($thousands)Year Ended December 31,2024 Year Ended December 31,2023 Change%Change Forecast 2025 Transmission 14,623 5,233 9,390 179%12,382 Distribution 30,655 29,748 907 3%35,628 Generation 51,986
213、60,709(8,723)-14%114,741 Other 3,302 1,902 1,400 74%7,542 Total 100,566 97,592 2,974 3%170,293 Off Balance-Sheet Arrangements The Company has no off-balance sheet arrangements such as transactions,agreements,or contractual arrangements with unconsolidated entities,structured finance entities,special
214、 purpose entities or variable interest entities that are reasonably likely to materially affect liquidity of or the availability of,or requirements for capital resources.Business Risks The following is a summary of the Companys significant business risks:Operational Risks Operational risks are those
215、 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 asset from use or age,latent defects and design or operator error,among other things.These risks could lea
216、d 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.Accordingly,to ensure the continued performance of the physical assets,the Company determines expenditures t
217、hat 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 to properly implement or complete approved maintenance and capital expenditures,or the occurrence of si
218、gnificant 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 potential to cause fires,mainly as a result of equipment failure,falling trees and lightning strikes to
219、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 incurred in the ongoing operation of its systems.The Company also has an insurance programme that prov
220、ides 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 insurance terms and coverage).In the event of a large uninsurable loss,the Company would apply to OfReg f
221、or recovery of these costs through higher rates.However,there is no assurance that OfReg will approve any such application(see“Business Risks-Regulation”section for a discussion of regulatory risk).Capital Expenditures Capital expenditures net of contribution in aid of construction for Fiscal 2024 w
222、ere$100.6 million,a$3.0 million or 3%increase from$97.6 million in capital expenditures for Fiscal 2023.The capital expenditures for Fiscal 2024 primarily relate to:Distribution System Extension and Upgrades-$24.3 million Life Cycle Upgrades-$18.6 million Generation Replacement-$13.1 million Battery
223、 Energy Storage System-$8.7 million.Resiliency Projects$8.1 million.AFUDC of$14.4 million was capitalised in Fiscal 2024 0.020.040.060.080.0100.0120.0Jan Feb Mar Apr May JunJulAug Sep Oct Nov DecCAPITAL EXPENDITURE(in USD millions)20232024Capital Expenditures Capital expenditures net of contribution
224、 in aid of construction for Fiscal 2024 were$100.6 million,a$3.0 million,or 3%increase from$97.6 million in capital expenditures for Fiscal 2023.The capital expenditures for Fiscal 2024 primarily related to:?Distribution System Extension and Upgrades-$24.3 million.?Lifecycle Upgrades-$18.6 million.?
225、Generation Replacement-$13.1 million.?Battery Energy Storage System-$8.7 million.?Resiliency Projects-$8.1 million.?Frank Sound 69/13kV Substation$4.7 million.?AFUDC of$14.4 million was capitalised in Fiscal 2024.Page|20 Caribbean Utilities Company,Ltd.2024 Annual Report Economic Conditions As with
226、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 to all hotels and large properties,i
227、ts 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 behaviour,particularly the consumptio
228、n 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 OfReg of adjustments to billing rates that allow a reasonable oppor
229、tunity 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 requires regulatory approval.There is n
230、o assurance that capital projects determined as being required by management of the Company will be approved by OfReg.In addition,while in the event of a large uninsurable loss the Company would apply to OfReg for recovery of these costs through higher rates,there is no assurance that OfReg would ap
231、prove 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,processing,use,and disposal of materials and waste products.C
232、UCs Environmental Management System(“EMS”)is registered to the ISO 14001 Environmental Standard.The Company was initially registered in 2004,pursuant to an audit by a third party of the EMS to ensure that the Company was meeting requirements put in place by the Government as well as self-imposed req
233、uirements.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 pollution.In order to maintain the Companys registration to this Standard an external surveillance audit is cond
234、ucted 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,and successfully passed its re-certification audit in 2024.In May 2002,the United Kingdom(“UK”)ratified the
235、 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 is legally bound to reduce its GHG emissions,however,Cayman has no emissions reduction target.As an overs
236、eas 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 Convention on Climate Change(“UNFCCC”)Secretariat.Under the UNFCCC,governments are obligated to gather an
237、d 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 countrys fuel consumption across a variety of sectors,production processes and distribution means.CUC continues
238、 to supply the Department of Environment with data for Caymans GHG inventory.In July 2023,the Cayman Islands Ministry of Sustainability&Climate Resiliency and the Energy Policy Council led a review of the National Energy Policy(“NEP”)and Implementation Plan.Approved in 2017,the initial NEP covered t
239、he period 2017 2037 and was planned to be reviewed every five years,not only to monitor and report on progress,but also to reset the targets and implementation plans in recognition of opportunities that will arise from the constantly changing technological environment.The NEP seeks to establish a fr
240、amework with which all stakeholders can identify,which sets the stage for the achievement of the territorys energy goals and considers the imperative need to reduce greenhouse gas emissions,thereby lowering the carbon footprint of the Cayman Islands.The revised NEP covers the period from 2024 to 204
241、5 and focuses on renewable energy,energy conservation methods and the promotion of energy efficiency.Through the EMS,CUC has determined that its exposure to environmental risks is not significant and does not have a materialimpact on CUCs financial reporting including the recording of any asset reti
242、rement obligations.Page|21 Caribbean Utilities Company,Ltd.2024 Annual Report 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 lie close to the
243、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 remain a risk.This
244、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 assets are subject
245、 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 continuously operate in a
246、ccordance 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 of extreme weath
247、er 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 and larger storm
248、 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.Insurance-Terms and Coverage The Company renewed its insuran
249、ce policy in July 2024 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 insurance with a 24-month indemnity period and a waiting period on non-named Wind and othe
250、r perils of 60-days.Any Named Wind,Quake and Flood occurrence 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,as the cost of such coverage is not considered economical.There is a single event cap of$100 million
251、 for Named Wind,Quake or Flood and$250 million otherwise.Each“loss occurrence”is subject to a deductible of$1.0 million,except for Named Wind(including hurricane)and Quake for which the deductible is 2%of the value of each location that suffers loss,but subject to a minimum deductible of$1.0 million
252、 and maximum deductible of$4.0 million for all interests combined.The Company maintains insurance coverage to cover weather risks that management of the Company believe is appropriate and consistent with insurance policies obtained by similar companies.In accordance with the T&D Licence,when an asse
253、t is impaired or disposed of within its original estimated useful life,the cost of the asset is reduced and the net book value is charged to accumulated depreciation.This treatment is in accordance with rate regulated accounting and differs from the accounting principles generally accepted in the Un
254、ited States of America(“US GAAP”)treatment of a loss being recognised on the statement of earnings.The amount charged to accumulated depreciation is net of any proceeds received in conjunction with the disposal of the asset.Insurance proceeds are included within the criteria.Defined Benefit Pension
255、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 rate of return on pension plan assets for the purposes of es
256、timating pension expense for 2024 is 5.9%.This compares to assumed long-term rate of return of 5.9%used during 2023.There is no assurance that the pension plan assets will be able to earn the assumed rate of return.The gain on pension plan assets during 2024 was 5%due to the investment performance(2
257、023:gain of 43%).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 consolidated pension expense and funding requirements.Net pension ex
258、pense 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 result in future consolidated contributions to pension plans
259、that differ significantly from current Page|22Caribbean Utilities Company,Ltd.2024 Annual Report estimates as well as causing material changes in consolidated pension expense.The discount rate assumed for 2024 is 5.6%compared to the discount rate assumed during 2023 of 5.2%.There is also measurement
260、 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
261、 provided under the“Critical Accounting Estimates”section of this MD&A.Cybersecurity and Information and Operations Technology The ability of the Company to operate effectively is dependent upon using and maintaining complex information systems and infrastructure that support the operation of genera
262、tion,transmission and distribution facilities,provide customers with billing,consumption and load settlement information,where applicable;and support financial and general operations.Information and operations technology systems may be vulnerable to unauthorized access or disruption due to cyber-and
263、 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 risk assessments of information and operational technology asset
264、s 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 27001 standards.Financial Instruments The Company is primarily expo
265、sed 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,accounts payable,accrued expenses,consumers deposits and advances for construction an
266、d long-term debt.Credit Risk 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 concentration of risk.The requirements for security deposits for certain customers,which are advance cash collections from cu
267、stomers 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 the requirement for security deposits,through the resources of its customer service department.Liquidity Risk The Com
268、panys 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 of maturing debt.The ability to arrange such financing is subject to numerous factors,including the results of operat
269、ions 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 mitigated by the terms of the Licences,which allows for rates to be set to enable the Company to achieve and maintain a
270、sound credit rating in the financial markets.The Company has also secured committed credit facilities to support short-term financing of capital expenditures and seasonal working capital requirements.The cost of renewed and extended credit facilities could increase in the future;however,any increase
271、 in interest expense and fees is not expected to materially impact the Companys consolidated financial results in 2025.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
272、 fluctuating interest rates on its short-term borrowings and other variable interest credit facilities.Page|23 Caribbean Utilities Company,Ltd.2024 Annual Report The 2024 Annual Consolidated Financial Statements have been prepared following the same accounting policies and methods as those used to p
273、repare the Companys 2023 Annual Audited Consolidated Financial Statements.New Accounting Policies The Company adopted ASU No.2023-07,Improvements to Reportable Segment Disclosures,for the year ended December 31,2024,and will adopt required modifications for interim periods beginning in 2025.This upd
274、ate requires disclosure of incremental segment information,including significant segment expenses and other items that are included in segment profit or loss.This adoption of this standard did not materially impact the Companys disclosures.Future Accounting Policies The Company considers the applica
275、bility and impact of all Accounting Standards Updates(“ASUs”)issued by the Financial Accounting Standards Board.Any ASUs not included below 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
276、and related disclosures.Expense Disaggregation:ASU No.2024-03,Disaggregation of Income Statement Expenses,is effective for CUC starting on January 1,2027,for annual periods and on January 1,2028,for interim periods,on a prospective basis,with retrospective application and early adoption permitted.Th
277、e ASU requires detailed disclosure of certain expense categories included on the consolidated statements of earnings,including energy supply costs,operating expenses,and depreciation and amortization expenses.CUC is assessing the impact on its disclosures.Critical Accounting Estimates The preparatio
278、n of the Companys consolidated 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 r
279、eported amounts of revenues 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 estimat
280、es,actual results may differ 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 d
281、efined benefit pension plan 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 expens
282、e and obligations were the discount rate for the accrued benefit obligation,inflation and the expected rate of return on plan assets.As at December 31,2024,the Company has long-term pension assets of$0.2 million(December 31,2023:Liability of$0.5 million).Property,Plant and Equipment(“PP&E”)Depreciat
283、ion Depreciation is an estimate based primarily 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 31,2024,the net book value of the PP&E was$750.
284、6 million,compared to$695.2 million as at December 31,2023,increasing as a result of the Companys generation and T&D capital expenditures.Depreciation expense for Fiscal 2024 was$44.3 million compared to$41.1 million for Fiscal 2023.Due to the value of the Companys PP&E,changes in depreciation rates
285、 can have a significant impact on the Companys depreciation expense.Accounting Policies Page|24 Caribbean Utilities Company,Ltd.2024 Annual Report Selected Annual Financial Information The following table sets out the annual financial information of the Company for the financial years ended December
286、 31,2024,2023 and 2022.Selected Annual Financial Information ($thousands,except Earnings per Class A Ordinary Share,Dividends declared per Class A Ordinary Share and where otherwise indicated)Year Ended December 31,2024 Year Ended December 31,2023 Year Ended December 31,2022 Total Operating Revenues
287、 293,682 287,225 267,336 Net Earnings for the Year 42,687 38,660 33,179 Earnings on Class A Ordinary Shares 41,685 37,690 32,209 Total Assets 850,962 777,807 726,539 Short-Term Debt and Current Portion of Long-Term Debt 19,935 70,935 19,481 Long-Term Debt 378,015 318,210 338,030 Preference Shares 24
288、9 250 250 Total Shareholders Equity 393,374 324,742 308,234 Earnings per Class A Ordinary Share 1.08 1.00 0.86 Diluted Earnings per Class A Ordinary Share 1.08 1.00 0.86 Dividends Declared per Class A Ordinary Share 0.735 0.715 0.700 Dividends Declared per Class B Preference Share 4.02 3.94 3.88 Com
289、parative results 2024/2023 Operating revenues for Fiscal 2024 totalled$293.7 million,an increase of$6.5 million from$287.2 million for Fiscal 2023.The increase in operating revenues was due to higher electricity sales and Z-factor revenue recognized in 2024 partially offset by lower fuel factor reve
290、nues.Net earnings for Fiscal 2024 were$42.7 million,a$4.0 million increase from net earnings of$38.7 million for Fiscal 2023.This increase is primarily attributable to higher operating income,other income and lower finance charges.For a discussion of the reasons for the changes in Operating Revenues
291、,Earnings 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 transmission&distribution system extension and upgrades and generation replacement and upgrades.The decreas
292、e in short term debt and current portion of long term debt was due to the repayment of the short term loan amounting to$51 million.2024 Fourth Quarter Results Sales for the three months ended December 31,2024(“Fourth Quarter 2024”)were 178.4 million kWh,a slight decrease of 1.3 million kWh when comp
293、ared to 179.7 million kWh for the three months ended December 31,2023(“Fourth Quarter 2023”).The decrease was driven by a decrease in the small commercial and residential customers kWh consumption in Fourth Quarter 2024.The average temperature during Fourth Quarter 2024 was 82.5 degrees Farenheit wh
294、en compared to 83.6 degrees Farenheit in Fourth Quarter 2023.Net earnings for the Fourth Quarter were$12.0 when compared to$9.5 million for the Fourth Quarter 2023.Electricity sales and Z-Factor revenue for the Fourth Quarter 2024 was$31.4 million(Fourth Quarter 2023:$28.8 million).Total operating e
295、xpenses for the Fourth Quarter 2024 decreased by 4%or$2.9 million to$62.4 million from$65.3 million for the Fourth Quarter 2023.The main contributing factors to this decrease were due to lower maintenance and transmission and distribution costs partially offset by higher depreciation and general and
296、 administration costs.Cash flow provided by operations,after working capital adjustments,for the Fourth Quarter 2024,was$20.3 million,an increase of$5.2 million when compared to$15.1 million for the Fourth Quarter 2023.This increase was primarily due to changes in non-cash working capital balances p
297、articularly the changes in accounts receivables and account payables.Cash used in investing Page|25 Caribbean Utilities Company,Ltd.2024 Annual Report activities totalled$27.4 million for the Fourth Quarter 2023,an increase of$5.3 million from$22.1 million for the Fourth Quarter 2023.The increase wa
298、s due to higher capital expenditures.Cash provided by financing activities totalled$23.0 million for the Fourth Quarter 2024,an increase of$18.5 million from$4.5 million provided by financing activities for the Fourth Quarter 2023.The increase was mainly due to proceeds from the Rights Offering offs
299、et by repayment of the overdraft loan facility.Capital expenditures for the Fourth Quarter 2024 were$27.5 million,a$3.6million,or 15%,increase from$23.9 million for the Fourth Quarter 2023.Quarterly Results The following table summarises unaudited quarterly information for each of the eight quarters
300、 ended March 31,2023 through December 31,2024.This information has been obtained from CUCs unaudited interim financial statements,which management of the Company prepared in accordance with US GAAP.These operating results are not necessarily indicative of results for any future period and should not
301、 be relied upon to predict future performance.($thousands,except Earnings per Class A Ordinary Share and Diluted Earnings per Class A Ordinary Share)Operating Revenue Net Earnings Earnings on Class A Ordinary Shares Earnings per Class A Ordinary Share Diluted Earnings per Class A Ordinary Share Dece
302、mber 31,2024 73,531 11,970 11,304 0.28 0.28 September 30,2024 80,676 14,446 14,334 0.38 0.38 June 30,2024 70,763 10,113 10,001 0.26 0.26 March 31,2024 68,712 6,158 6,046 0.16 0.16 December 31,2023 74,702 9,523 8,890 0.24 0.24 September 30,2023 73,574 13,936 13,824 0.36 0.36 June 30,2023 67,868 9,988
303、 9,876 0.26 0.26 March 31,2023 71,081 5,213 5,100 0.14 0.14 December 2024/December 2023 Net earnings for the three months ended December 31,2024(“Fourth Quarter 2024”)were$12.0 million,a$2.5 million increase when compared to$9.5 million for the three months ended December 31,2023(“Fourth Quarter 202
304、3”).This increase was due to higher electricity sales and Z-Factor revenues of 31.4 million(Fourth Quarter 2023:$28.8 million)and lower maintenance costs of$1.0 million(Fourth Quarter 2023:$1.2 million),partially offset by higher depreciation of$11.4 million(Fourth Quarter 2023:$10.6 million)and hig
305、her general and administration expenses of$3.3 million(Fourth Quarter 2023:$2.2 million).After adjustment for dividends on the preference shares of the Company,earnings on Class A Ordinary Shares for the Fourth Quarter 2024 were$11.3 million,or$0.28 per Class A Ordinary Share,as compared to$8.9 mill
306、ion,or$0.24 per Class A Ordinary Share for the Fourth Quarter 2023.September 2024/September 2023 Operating income for the Third Quarter 2024 totalled$13.8 million,a decrease of$0.1 million compared to operating income of$13.9 million for the Third Quarter of 2023.This decrease was primarily attribut
307、able to the 2%increase in kWh sales and the 3.7%and 3.2%base rate increases effective June 1,2023 and June 1,2024,respectively,partially offset by higher general and administration and transmission and distribution expenses.Net earnings for Q3 2024 were$14.4 million,a$0.5 million or 4%increase from
308、net earnings of$13.9 million for Q3 2023.This increase was primarily attributable to higher 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 Q3 2024 were$14.3 million,or$0.38 per Class A Ordinary
309、 Share,as compared to$13.8 million,or$0.36 per Class A Ordinary Share for Q3 2023.June 2024/June 2023 Operating income for the Second Quarter 2024 totalled$10.0 million,an increase of$0.1 million compared to operating income of$9.9 million for the Second Quarter of 2023.This increase was primarily a
310、ttributable to the 5%increase in kWh sales and the 3.7%and 3.2%base rate increases effective June 1,2023 and June 1,2024,respectively,partially offset by higher depreciation,maintenance and general and administration costs.Net earnings for Q2 2024 were$10.1 million,a$0.1 million or 1%increase from n
311、et earnings of$10.0 million for Q2 2023.This Quarterly Results Page|26 Caribbean Utilities Company,Ltd.2024 Annual Report increase was primarily attributable to higher operating income partially offset by higher finance charges.After the adjustment for dividends on the preference shares of the Compa
312、ny,earnings on Class A Ordinary Shares for Q2 2024 were$10.0 million,or$0.26 per Class A Ordinary Share,as compared to$9.9 million,or$0.26 per Class A Ordinary Share for Q2 2023.March 2024/March 2023 Operating income for the First Quarter 2024 totalled$5.6 million,an increase of$0.3 million compared
313、 to operating income of$5.3 million for the First Quarter of 2023.This increase was primarily attributable to the 6%increase in kWh sales and a 3.7%base rate increase effective June 1,2023 partially offset by higher depreciation,maintenance,and transmission and distribution cost.Net earnings for Q1
314、2024 were$6.2 million,a$1.0 million increase from net earnings of$5.2 million for Q1 2023.This increase was primarily attributable to higher other income partially offset by increase in finance charges.During Q1 2024,the increase in Other Income was due to the recovery of billing in arrears amountin
315、g to$0.6 million for a six-year period related to CCTV pole attachments.After the adjustment for dividends on the preference shares of the Company,earnings on Class A Ordinary Shares for Q1 2024 were$6.0 million,or$0.16 per Class A Ordinary Share,as compared to$5.1 million,or$0.14 per Class A Ordina
316、ry Share,for Q1 2023.Disclosure Controls and Procedures The President and Chief Executive Officer(“CEO”)and the Chief Financial Officer(“CFO”),together with management of the Company,have established and maintained the Companys/disclosure controls and procedures(“DC&P”),to provide reasonable assuran
317、ce that material information relating to the Company is made known to them by others,including during the year ending December 31,2024;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 i
318、s recorded,processed,summarised and reported within the time periods specified in securities legislation.Based on the evaluation performed of DC&P,it was concluded that the DC&P of CUC is adequately designed and operating effectively as of December 31,2024.Internal Controls over Financial Reporting(
319、“ICFR”)The CEO and CFO of the 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 fina
320、ncial reporting and the preparation 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
321、 subject to risk that controls 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
322、2013 Internal Control-Integrated 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 31,2024.There have been no
323、 changes in the Companys ICFR that occurred during the year ended December 31,2024 that have materially affected,or are reasonably likely to materially affect,the Companys internal control over financial reporting.Page|27 Caribbean Utilities Company,Ltd.2024 Annual Report Outlook With steady economi
324、c growth in the Cayman Islands,the Company is expecting growth in electricity demand in 2025 and beyond.The Company submitted a Certificate of Need(“CON”)to OfReg in June 2024,as specified in the Companys Transmission and Distribution Licence(2008).In recognition of the evolving energy demand on Gra
325、nd Cayman,the submitted CON proposes the addition of 36.1 MW of firm capacity and 100 MW of solar plus storage to be connected by June 1,2027.Should the Companys CON be accepted,the procurement will reduce costs to consumers and meet or exceed,the incremental National Energy Policy(“NEP”)2027 target
326、s allowing for 39%of renewable energy penetration to be achieved by 2027 and a reduction in CO2 emissions by 28%in comparison to 2019.The CON is currently being review by OfReg.In March 2024,the Company contracted to lease an additional 10MW of Temporary Generation(“Block Three”)to meet the projecte
327、d increasing energy demand for 2024.The lease period is for a minimum of 12 calendar months with option to renew commencing on the day the equipment was received by the Company in Q2 2024.Block Three increased the total temporary generation to 20MW by end of the year.The regulatory treatment of Bloc
328、k Three is pending OfRegs approval.In September 2023,in its continuous effort to reduce the cost of energy production and carbon emissions,the Company sought qualification submissions from prospective natural gas suppliers.In line with the Cayman Islands NEP and the Companys Integrated Resource Plan
329、,CUC is committed to increase the use of cleaner energy and reduce greenhouse gas emissions over the long term.The Request for Proposal has been finalized and was issued to prequalified bidders in September 2024.In 2022,the Company received the regulatory approval for lifecycle upgrades to five MAN
330、generating units totalling 68MW of capacity.These upgrades will bring the engines up to the most current specification and facilitate a further 25 years of service after the upgrade.It will also prepare the engines for dual-fuel conversion which will allow the engines to run on natural gas and diese
331、l.As of December 31,2024,three out of five generating units have completed the life cycle upgrade.All units are expected to be completed by the fourth quarter of 2025.In October 2021,following a consultation process,OfReg announced the adoption of a new Renewable Energy Auction Scheme(“REAS”)to soli
332、cit additional solar and wind power over the next decade.In April 2022,OfReg issued a Request for Qualification(“RFQ”)for round 1 of the REAS.Round 1 of the REAS is intended to select a party,or parties,to operate and maintain Solar Photovoltaic Plants and Energy Storage up to 100MW with 60MW Batter
333、y Energy Storage System Facility.OfReg also issued an RFQ for a 23MW Dispatchable Photovoltaic generation plant paired with energy storage facility.CUC prequalified for both opportunities and is preparing to participate in these bid invitations.The Company collaborated with OfReg to provide all information required for issuing the Request for Proposal.With the increasing physical risk and continui
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