Caribbean Utilities Company(CUC)
Partnership Through Transparency
A Company profile by Caren A.Thompson,CUC's Manager of Corporate Communications
It is often difficult to define an electric company with oneword, but in the case of Caribbean Utilities Company, Ltd. (CUC),the appropriate word is "commitment." Since 1966, CUChas committed itself to providing superior electricity serviceto Grand Cayman while maintaining solid growth and a strong companyculture. Even its mission statement, which CUC takes very seriously,outlines the company's commitment to "creating value"for its customers, shareholders and employees.
Facilities and Services
CUC had 222 employees (193 of whom are Caymanians and 29 are onwork permits) and 18,607 customers (2,948 commercial and 15,659residential) at the end of July 2000. CUC operates a modern andfuel-efficient complement of 16 diesel generators, one steam turbineand one gas turbine with a total installed capacity of 115 megaWatts(MW).
An all-time peak demand of 70 MW occurred in August 2000 andpeak demand increased by 5.6% compared with the same period in1999. The average residential customer consumes approximately1,000 kilowatt-hours at a monthly cost of approximately $160.
Regional Affiliations andAlliances: Preparing for the Challenges of the Millennium
CUC is a memberof the Caribbean Electric Utility Services Corporation (CARILEC),a 21-member association of Caribbean-based electric utilities.CARILEC offers training and other common services, conducts surveys,circulates management information and provides a forum for theexchange of technical information.
In addition to these services, CARILEC also co-ordinates a hurricaneaction plan in which teams of linemen from all utilities are kepton call during the hurricane season. Their role is to assist inthe restoration of damaged transmission and distribution systems.
Seven CUC linemen travelledto the Bahamas in the aftermath of Hurricane Floyd in September1999, to assist the Bahamas Electricity Corporation with the restorationof its transmission and distribution system.
Strategic Alliances
The Company entered into strategicalliance agreements with MAN B&W Diesel AG of Germany (MANB&W) and ABB Power T&D Company, Inc of the USA (ABB) in1999. MAN will design and install diesel-generating units on aturnkey basis for the Company's 10-year generation expansion programme.
The first phase of this agreement was completed in the summerof 2000 and involved the installation of two 12.25 MW V48/60 medium-speed,diesel-generating units at the North Sound Road Plant at a contractprice of approximately US$30 million.
The two units, which are located in a newpower plant engine room, will replace older, less efficient generatingunits nearing the end of their economic lives of approximately20 years and meet the growing demand of customers.
Concern for the environment was paramountin this project evidenced by the installation of soundproofingmaterials in the new engine room, reducing the level of noisetransmitted to other areas of the power plant. In addition, theCompany erected a 140-foot exhaust stack, 60 feet higher thanCUC's other engine stacks, significantly improving the dispersionof emissions as well as the air quality surrounding the plant.
The new generating units as well as existing units will be tiedinto a computerised Integrated Control System (ICS), currentlyunder installation to provide operating staff with more accurateand timely information and create a more consistent and efficientpower supply.
In addition to all of the Company's generating units, all substationswill be tied into a new supervisory control and data acquisition(SCADA) system allowing remote control and monitoring of the transmissionand distribution system.
A new 3,200 square-foot control room buildingwhich was constructed in 1999 will house the generation and transmissionand distribution control equipment and is scheduled to becomeoperational in December 2000.
ABB will be installing 69KV substationsand auxiliary equipment over the next seven years to completea looped 69KV transmission system capable of handling 100 percentof the projected system load for the foreseeable future with maximumreliability.
The first phase of this agreement involved the design and installationof a new US$13.5 million 69KV substation at the North Sound RoadPower Plant that is due to be completed later this year. In addition,a new substation is being constructed in the Fern Gardens areaand is scheduled for completion in October 2000.
This substation is totally enclosed within a building designedto resemble a traditional Caymanian-style house so that it blendswith the surrounding residential neighbourhood. Other substationsare planned for Frank Sound, Seven-Mile Beach and North GeorgeTown. The existing West Bay and Bodden Town substations will becompletely rebuilt by 2008.
In conjunction with the construction ofthe substations, CUC plans to install two 69KV transmission loopsto link our substations and increase system reliability. The transmissionloops are expected to be completed by 2002 and will incorporatetwo submarine cables in the North Sound.
One cable will run from the North Sound Road Plant to the RumPoint area, while the other will extend from the North Sound RoadPlant to the Morgan's Harbour area. These cables will be installedin an environmentally friendly manner without dredging and willgreatly increase the reliability of our T&D system and minimisestorm damage risks.
Based on current projected growth rates,CUC developed with its consulting engineers, R W Beck Inc., along-term generation expansion and transmission and distributionplan. If growth continues as anticipated, CUC will require 80MW of additional capacity over the next 10 years.
Under the strategic alliance agreements,CUC will be given "most preferred customer" pricingas well as other advantages associated with continuity of productlines, improved design and construction and standardisation ofequipment, parts and training.
The lead-time for future installations willbe shorter, costs will be less expensive and there will no longerbe a need for lengthy and costly tender processes. The benefitsof these alliances with MAN B&W & ABB will extend beyondCUC's doors as it has also committed to providing work to localsubcontractors and being involved in community programmes.
Customer & EmployeeShare Purchase Plan
CUC's Class A Ordinary Sharesand 8% Class C, Series 2 Preference Shares are listed in U.S.funds on The Toronto Stock Exchange under the trading symbols"CUP.U" and "CUP.PR.U", respectively. Theycan be bought or sold through any recognised stockbroker.
The Company's Customer Share Purchase Planprovides customers resident in Grand Cayman the opportunity tobecome shareholders without having to pay brokerage fees and relatedtransaction costs.
CUC also provides an opportunity twice peryear for employees to become shareholders through its EmployeeShare Purchase Plan. The Company allows payroll advances to employeeswho wish to purchase shares and these advances are recovered throughdeductions over a 12-month period.
Pension Plan
The Company's Pension Fund, which isregistered under the National Pensions Law, provides income toeligible employees upon retirement and at the end of June wasvalued at more than US$1,143,164.78. Contributions exceeding theminimum requirements of the National Pensions Law are paid tothe Company's Provident Fund, which at the end of June was valuedat US$9,959,624.00.
Training
Training is a top priority atCUC. The London-based City and Guilds (C&G) and the NationalExamination Board for Supervisory Management, two of the best-knownbodies for vocational and supervisory training in Great Britain,appointed CUC as an official examination centre in 1995 and 1997,respectively.
This designation enables CUC to increaseits local training capabilities as well as affiliate itself withinternational examining bodies of the stature of these two organisations.
The Company awards scholarships to Caymanianemployees to complete Associate's, Bachelor's and Master's degreeprogrammes overseas. In addition, the company grants an overseasscholarship of up to US$20,000 per year to a Caymanian under 27years of age who displays an aptitude for engineering and wishesto pursue a career with CUC following graduation. The currentscholarship holder is Robert Whorms, a 1996 honours graduate ofJohn Gray High School and winner of the Chamber of Commerce'sTechnology Award, who is currently attending Florida InternationalUniversity in pursuit of a Bachelor's Degree in Electrical Engineering.Robert is expected to return to work with the Company upon hisgraduation in 2002.
The Company strongly believes in maintaining a happy and productiveworkforce as well as recognising its employees' contributionsto its success. For example, CUC regularly promotes from withinwhen filling vacancies and hosts an Annual Long Service AwardsCeremony to honour employees who have given the Company 10, 15,20, 25 and 30 years of service.
Community Service
The Company continues to playan active role in the community and is a major sponsor of manylocal events such as the Cayman National Cultural Foundation'sAnnual Playwriting Competition, the Amateur Athletics Association'snational age group championships, the U-17 National Football Teamand an Annual Half-Mile Sea Swim.
The Company established a Community Involvement Team in 1998 tobetter enable volunteer employees to have a greater hands-on approachwith community projects specifically geared to improving the livesof Cayman's youth.
The Team's first major project was the restorationand beautification of the Seven Mile Public Beach facilities in1998 and similar projects were carried out at the North Side andEast End public beaches in 1999 and 2000. A company-wide toy drivewas successfully completed in 1999 resulting in the creation of"Toy Corners" in all district health clinics to provideentertainment areas for kids.
The Team also has an affiliation with thementally and physically challenged individuals who attend theLighthouse School and the Sunrise Adult Training Centre and conductsregular activities with these groups.
Others projects co-ordinated by the CommunityInvolvement Team include a six-week Summer Vocational Programme,offering on site work experience for high school students in thehope of preparing them for their careers. In the summer of 2000,13 students from John Gray High School and one student from St.Ignatius High School were exposed to fire safety, electrical andline maintenance, welding, plant operations, auto mechanics andengineering.
CUC's Future Projections
Commenting on the future of CUC and its partin the growth of Grand Cayman, CUC President & Chief ExecutiveOfficer Peter A. Thomson remarked in the company's 2000 AnnualReport:
"CUC must continue to maintain a flexibleposition to respond quickly to change.
"The challenges we face today are inmany ways more complex than those of yesterday. We must operatedifferently and be more creative and innovative in meeting theexpectations of an increasingly sophisticated customer base.
"There is no alternative. Choosingthe right combination of business strategies one that isturning to technology for solutions - will be as critical as ever,not just for increased shareholder value, but also to enable usto provide cost-effective energy solutions to our customers."