BELCO ‘Impacted By Rapidly Falling Demand’

November 2, 2018

It’s been “challenging” for BELCO as they have “been impacted by rapidly falling demand and pressure from the Government and our customers to lower our rates,” Ascendant Group – the parent company of BELCO – said today [Nov 2] as they announced results for the first nine months of 2018.

Ascendant President and CEO, Sean Durfy said: “It’s been a challenging first nine months of this year for Bermuda Electric Light Company [BELCO], our regulated business, which has been impacted by rapidly falling demand and pressure from the Government and our customers to lower our rates.

“Our non-regulated businesses have performed according to forecasts and are showing positive growth that now contributes 25% to the net income of the Ascendant Group.”

“There are a number of projects and initiatives related to BELCO’s power generation and transmission and distribution businesses that have been progressing in 2018.”

Mr. Durfy said: “We have made significant regulatory progress with the public consultations well advanced on both the Integrated Resource Plan [IRP], that will set the future generation mix for Bermuda, and the tariff methodology, that will set our rates going forward.

“Our capital plan that includes building the North Power Station [NPS], the Battery Energy Storage System [BESS] and upgrading our transmission and distribution system is progressing well.

“The NPS will usher in a new era for BELCO with four 14 MW engines that can run on diesel or be converted to run on LNG. These engines will be more efficient and require less maintenance which should help bring our costs down and ultimately reduce electricity bills for our customers.”


The company said, “Core earnings from operations, before corporate expenses, were $11.9 million compared to $12.8 million for the third quarter of 2018 and 2017 respectively. On a year-to-date basis, core earnings from operations were $22.9 million compared to $27.2 million for the same period in 2017.

“The decrease in core earnings from operations was largely the result of lower revenues arising from lower electricity demand and higher depreciation period over period at BELCO. Maintenance savings of approximately $1.4 million were offset by a reversal of regulatory fees in the prior year.

“Ascendant’s non-utility businesses continued to provide core earnings growth in 2018, growing by $0.6 million or 20% year over year.

“Third quarter reported earnings were $10.1 million compared to $12.2 million for the same period in 2017. Year-to-date reported earnings in 2018 were $13.2 million, or $1.34 per share compared to $22.4 million, or $2.26 per share, for the same period in 2017.

“Reported earnings were impacted by the changes to core earnings from operations described above as well as $1.4 million in advisory fees related to an unsolicited expression of interest to purchase the Company, $2.3 million in long-term incentive compensation costs driven partly by the share price increase this year and $1.0 million in non-core earnings included in 2017 from the equity pick-up of earnings in AIRCARE LTD.’s Cayman Islands affiliates, Otis Air-Conditioning Ltd. and O Property Holdings Ltd.

Cash flow and capital spending

“Cash flow from operations [excluding the effect of working capital changes] totaled $30.7 million and $31.1 million for the first nine months of 2018 and 2017 respectively. This decrease in cash flow from operations is largely due to lower revenues arising from lower electricity demand.

“Capital expenditures for the first nine months of 2018 were $54.8 million compared to $13.9 million for the same period of 2017, reflecting execution of the Company’s capital plan and, in particular, strong progress on the NPS.

“The Company’s share price increased 69% from $9.79 to $16.50 over the nine months ended 30 September, 2018. Management believes that the execution of the Company’s strategic plan will continue to unlock the underlying value of its businesses and therefore share repurchases represent the most efficient way to return capital to shareholders. During the nine month period ended 30 September, 2018, the Company repurchased 388,784 shares at an average cost of $16.02.

“The Company’s Board of Directors declared a quarterly dividend of 11.25 cents per common share. Year-to-date, the Company has declared dividends totaling 45 cents per common share.

Executing Ascendant’s Strategic Plan

“The Company continues to make significant progress on its strategic plan. The Company recently approved $55 million of its five-year $124 million transmission and distribution capital plan and work has now started on the $120 million replacement generation and battery storage project at the North Power Station. Construction is expected to take 18 months with commissioning and handover by December 2019.”

Mr. Durfy said: “Our customers and the Government have said we need to reduce our electricity rates. We are committed to doing all we can to reduce our costs and be a more efficient utility despite the challenging business environment which includes falling demand and increasing costs of generating and distributing electricity. At the same time, we are having to invest in upgrading our aged infrastructure at the generating plant and in our transmission and distribution system with a combined cost of approximately $250 million.

“Growth in our unregulated businesses is progressing well and we will be looking to grow these businesses to contribute more to our bottom line going forward.”

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Comments (50)

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  1. Really says:

    And the band played on……..

  2. 2 Bermudas says:

    Burt has a new Finance Minister so we can point the finger at him. Titty milk drinka!! Ha ha ha!!

    • Um Um Like says:

      All that new fintech and blockchain technology will require loads of electricity. Do not fear, Belco. Demand will increase and soon enough you’ll be laughing all the way to the Burtbank.

      PLP, putting Bermudians first (except the gay ones).

  3. Anthony says:

    How does BELCO have falling demand when there is no other utilitility co can someone explain that to me.

    • Wahoo says:

      Less people on the island? Plp chasing out foreign money… know the ones who run the ac all day and spend money in restaurants and are happy to shop locally. Just a hunch.

    • Question says:

      Because the population is falling and the economy is shrinking. Simple really.

    • Wahoo says:

      Empty offices due to lack of confidence in an anti foreigner state run by a socialist party and its’ various factions.

      • Stò the propaganda says:

        Absolute nonsense. Where has the pop talked about socialism and driving foreigners out. All are welcome and businesses who pass compliance can set up any time. Why do you use your time to push these white lies?

        • Question says:

          Ever tried getting a work permit through? Ever tried getting planning permissin? They aren’t ‘white lies’. Nice try at racism though. The facts are what they are.

          • Flash says:

            I think he meant white lies as in “a harmless or trivial lie, especially one told to avoid hurting someone’s feelings”. Not white lies as in lies from whites.

            • question says:

              The purported “lies” were not “harmless and trivial to avoid hurting someone’s feelings”. He was taking issue on the serious subject of why electricity demand is down. He was suggesting, wrongly, that businesses can set up here at any time. They can’t. We all know what he meant by “white lies”.

        • aceboy says:

          They speak with their support for marches and their actions. Tax tax tax. That is socialism. Marching to protest immigration that seeks to bring IN more people is anti foreigner. Where have you been?

        • Wahoo says:

          They have not told you that they are socialists yet but all their actions point in that direction. They will let you know when you are ready and damage is done.

    • 2 Bermudas says:

      Solar panels and less people in de island!! I know Burt has been saying de economy is booming but that’s after he’s had a few hits of de titty milk!! Ha ha ha!!

    • Chris Nelson says:

      A reduction in population and an increase in solar power and other energy saving measures are two major factors.

    • Clarity says:

      Less users on the island

    • on de rock says:

      Demand is down because there are less people on the island, there are hundreds of thousands of square feet of empty commercial space in town, more conservation, more renewable energy to name a few.

    • Codfish says:

      People are actively trying to reduce electricity both from an environmental and cost saving perspective. LED lighting has also driven a reduction. Lower number of Bermuda residents has also contributed.

    • Truth be told says:

      Less Expats, less Int’l Business, less confidence.

      Many IB companies are quietly letting people go. No mentions in the news but it is happening big time. And then there are the mergers and acquisitions that ARE mentioned in the news. It all adds up to less demand.

      • Sandgrownan says:

        Truth. None of the jobs actually need to be here and the PLP numpty’s don’t seem to understand.

    • Sandgrownan says:

      Fewer people and more efficient appliances.

  4. Daniel says:

    When many other countries are focusing on renewables power generation from wind and solar, BELCO is going backwards and keeping Bermuda reliant on fossil fuel generation for more than another decade. So we are tied to buying imported commodities and exposed to the ups and downs of commodity pricing. This does not benefit Bermudians long term but allows BELCO to keep making a profit which it passes onto the Ascendant shareholders. As long as the shareholders control BELCO it will not do what is in the long term best interest for Bermuda and the environment.

    • aceboy says:

      Someone hasn’t read the emerge plan Belco produced.

      Those shareholders are a wide diverse group. If you have a pension it invests in Belco shares.

      Educate yourself before sprouting stupidity.

  5. My electricity is derive from the ethers…I only purchase it from Belco because I feel sorry for them.
    They are like poor relations and it is me belief that they are my responsibility…I MEAN REALLY…e

  6. Anon Ymous says:

    Anyone think a dramatic drop in electricity demand could be anything to do with reduced business confidence, a quiet exit of foreign business / labour and the subsequent empty offices and apartments, no longer running lights and ac? Of course, everyone is cutting back on consumption but there has to be other factors.

    • Triangle Drifter says:

      How many of us have been changing to energy efficient LED lights, installing water heater timers & simply turning things off when not using? All these little things add up across many customers.

      Electricity is a commodity like anything else. BELCO cannot charge for killowatt hours that we do not use.

      • Toodle-oo says:

        Remember the energy saving ads that BELCO used to run way back a decade or so ago ?
        Hopefully people who had never given it much thought previously took heed and tried it .
        I’ve been using my water heater on demand for 40 years now and currently it’s about a $40 saving per month in itself , not to mention energy efficient lights and LED TV etc.
        Maybe it’s a double whammy for them now as it might have worked but there’s thousands less consumers here as well.
        I think there’s a whole lot more redundancies coming soon on Serpentine Road . Will there be more industrial action then ?
        It could get messy if people who think they’re entitled to a job for life can’t figure out the economics of what the rest of us have had to deal with for many years .

  7. Deonion says:

    So why is demand down?

  8. steve says:

    NO! NO! NO! NO! lol

  9. Real Deal says:

    i have no simply for them they had the cash to improve and push Bermuda into the future. but they kept us stock in the past while they sat on the money and Bermuda business slowly suffocated from the cost increasing. just like the company that makes buses for Bermuda. why are we still buying a single bus from them.

    I have Big Plans for Bermuda

    • Blankerchief says:

      There is absolutely nothing wrong with those buses or the manufacturer. The problem is solely in preventative maintenance or a lack of it. Recently I’ve seen buses with vent cut outs on the engine compartment. Why? Obviously to keep the engine cooler. The bus didn’t come standard with this and worked fine before so why is it now overheating? Logic tells me cleaning out the coolant system on a semi regular basis would be a good start.

      • Real Deal says:

        Blankerchief those vents are cut because the buses need to be customized for how they are run in Bermuda’s climate. the only reason they say we still use that company is because we have so many of their buses and they don’t want to make the transition. same type of logic belco used to get them self’s in this same rot they are in

    • Question says:

      Where are those buses that landed here in January?

  10. Really! says:

    Durfy is still here? Must be worrying about his exit bonus! lol

  11. Truth is killin’ me says:

    Mr. Durfy, the problem with Belco and your issues right now are that your projections over the years were all wrong. Belco’s greed set them up for a fail. Belco projected demand for the future and ultimately the demand disappeared with expats leaving the island and people tightening their wallets. This is not rocket science brother! Reinvesting in your dilapidated equipment should have been a priority over profits for your shareholders. Nuff said.

  12. Answers says:

    The demand is down simply due to the economy of Bermuda. The Bermuda Government overspends with little consideration for the implications. Government overspending = national debt = less jobs = less consumption of goods/services (like belco, retail etc) in conjunction with a large number of people leaving the island each year due to cost of living and xenophobic immigration policies.

  13. legalgal says:

    And those that do stay have to cut back and forego AC etc. Expect people are becoming more concerned with conserving energy too, so timers on boilers etc. Next go off grid and use the free sun!

  14. spider says:

    Belco’s spin on earnings. Bring out the hankerchief’s.

    • Really says:

      BELCO can’t loose. They convinced the regulator to approve their bogus plan for another massive fossil fuel plant and system upgrade while demand is falling. A chicken licken story. What will the regulator do with the better plans they published on their website? Will we be stuck with BELCO’s wrong plan and pay higher electricity prices so profits and bonuses can be paid to foreigners while they get rid of more and more Bermudians.

      • sandgrownan says:

        You sound like an expert on electricity generation. Please tell us more.

  15. Triangle Drifter says:

    BELCO must be the most widely held publicly owned private company in Bermuda owned by hundreds, maybe a few thousand Bermudians. Looks like many here don’t think that they deserve a fair return on their investment. They think that BELCO is like the Civil Service, a place of employment for life where efficiency does not matter & accountability is a foreign word.

    • Comfortably numb says:

      There are similarities between Belco and the Civil Service in that they are both over staffed, fiercely protected by their unions and firmly believe they have a job for life regardless of performance. They do work hard post hurricanes and, no doubt, reap the rewards in terms of overtime but that probably equates to one week on average per year. What do they do the other 51 weeks?

    • aceboy says:

      They actually think Belco is owned by a few cigar chomping monopoly guys wearing top hats and braces.

  16. Me says:

    All rhe bolts if electricity are coming outta the BIU

  17. Optimism says:

    So, how much have the shareholders been paid over the same periods?

    • shrew says:

      why don’t you put your big boy pants on and buy some shares!

  18. boo hoo says:

    Oh cry me a river, Belco. You want to whine you made less millions in profit off the poor people of Bermuda? Belco should not be private to start with, or TCD, as this allows prices of vital things we require to go up without control, like a monopoly. You people make millions off us, and you expect sympathy? Break down those millions per household. How much did we each pay to your profit in your pockets? 27 million divided by 20,000 households equals $1350 each. Gee, thanks. I could have used that money. Not so you can pamper yourselves with bonuses and fat paychecks at our expense. Owl is watching.

    • Boob hoo says:

      BooHoo…you’ve successfully revealed that you’re nothing but a moron.
      Wow…the stupidity is strong with you.

  19. Do not Do not Do not says:

    So we were constantly preached to about cutting back on usage now they are crying that demand has dropped off. Scratching my head.