TUESDAY, MAY 15: Today, Ascendant Group Limited announced financial results for 2011. Ascendant Group’s subsidiaries are Bermuda Electric Light Company Limited (BELCO), Bermuda Gas & Utility Company Limited, inVenture Limited, PureNERGY Renewables, Ltd. and Sigma Corporate Services Company Limited.

Ascendant Group’s consolidated net earnings for 2011 declined to $11.12 million from 2010 results of $16.02 million. The decrease reflects the impact of the Island’s economic challenges, which resulted in Ascendant Group operating subsidiaries experiencing reduced sales.

Results for 2011 also include the effect of significant one-time charges totalling approximately $3.88 million, which arose from decisions regarding both the company’s pension plan and employee early retirements. Effective 1 January 2012, BELCO staff who joined the company prior to 1 January 2006 were transitioned from a Defined Benefit Pension Plan to the Defined Contribution Pension Plan in which the majority of staff currently participate; as a result, a one-time, non-cash expense of $3.38 million was incurred. Also in 2011, a number of long-serving employees throughout Ascendant Group received early retirement compensation packages totalling approximately $1.5 million. The net cost of early retirement, after considering employment costs avoided for 2011, was approximately $500,000. Although Ascendant Group incurred significant one-time costs with the decisions to offer early retirement and freeze the Defined Benefit Pension Plan, the company anticipates there will be substantial future savings as a result of both of these actions.

Net parent company operating expenses increased $2.47 million during the current year to $3.55 million, from total net 2010 expenditures incurred of $1.08 million. The increase was due in part to administrative costs associated with hiring an international consulting firm to assist with succession planning, and an energy consulting firm to prepare a cost-of-service study and assist with the review of tariff rate alternatives, rate case preparation and development of BELCO’s interconnection policy.

Capital expenditures of Ascendant Group companies were also affected by the economic downturn as investment in property, plant and equipment decreased from $29.5 million in 2010 to $25.7 million in 2011.

Bermuda Gas

Bermuda Gas’ net income results decreased 26.8%, or $353,916, to $969,104 from net income of $1.32 million reported in 2010.  Gas sales were 2.5% higher than 2010 sales, as price increases offset decreased volumes in both residential and commercial markets, directly related to the downturn in the local economy. However, net income was negatively impacted as lower sales margins were realised in 2011, following management’s decision not to pass on increased costs to consumers in deference to the economic realities facing the Island. Appliance sales decreased 3.0% when compared to 2010 sales. Service sales decreased 3.2% and parts sales were also down 9.5% on 2010, again due directly to the economy.

Bermuda Gas capital expenditures incurred in 2011 totalled $1.95 million, as compared to $661,000 in 2010, as this company spent $1.56 million during the year to finalise building leasehold improvements, bringing its Warehouse, Parts & Service Departments, Administration, Customer Care and Appliance Showroom under one roof.


PureNERGY Renewables, Ltd. sustained a loss of $1.39 million in the current year, following a 2010 loss of $405,276. Although recent announcements regarding financing, tax relief and other incentives for small-scale renewable energy systems are encouraging for PureNERGY, the operation of this company will be assessed during 2012, if these do not result in opportunities.


inVenture Limited reported a consolidated net loss of $184,560 in 2011, as compared to a 2010 consolidated net loss of $72,035. inVenture, which was formed to pursue new investment opportunities outside of the energy business, incorporated two new organisations, iFM Limited and iEPC Limited during 2011. iFM is a joint venture company that is 60% owned and controlled by inVenture and 40% owned and controlled by a Bermuda-registered, exempted subsidiary of Black & McDonald Limited, a privately held Canadian company.  iEPC, which was incorporated on 11 July 2011, is a wholly owned subsidiary of inVenture, established to provide engineering, procurement, construction and consulting services for Ascendant Group companies, as well as third parties. As at 31 December 2011, neither company had any financial activity.


Sigma, which provides corporate services to Ascendant Group and its subsidiaries, recorded net income in 2011 of $28,670 from training courses offered externally, after breaking even in 2010. Sigma provides legal, external relations, human resources and corporate communications services primarily to Ascendant Group.


BELCO’s net income declined $1.49 million to $14.54 million from 2010 results of $16.03 million.  Sales of electricity, net of fuel adjustment income, decreased $3.22 million in 2011 to $150.75 million, down from the $153.97 million achieved in 2010. Basic tariff rates and facility charges remained unchanged from 2010, following management’s decision, which was ratified by the Board of Directors, not to increase these rates due to the economic downturn, although entitled to do so, given prior approval from the Price Control Commission in 2006.

Residential kilowatt hour (kWh) sales decreased 4.2% in 2011, following an increase in 2010 of 1.9%. Average consumption per customer decreased 4.2% during the year to an average monthly consumption of 678.5 kWh. A significant decrease of 11.58 million kWh is directly related to the economic downturn, as the number of active, metered residential units has declined due to a weak economy and increased numbers of non-Bermudian work permit holders leaving the Island, as some businesses either moved operations out of Bermuda or reduced staffing levels.

Sales in the commercial sector were down 1.3%, or 4.17 million kWh, compared to a decrease of 1.9% in 2010. Primary factors responsible for the reduction are business closures, reduced hours of operation, lower occupancy levels and concerted efforts by many businesses to reduce operating costs through energy conservation, due to the Island’s economic downturn.

Fuel is BELCO’s most significant expense. In 2011, total fuel costs increased $14.71 million from $107.34 million in 2010 to $122.05 million. This increase is due primarily to a 17.7% increase in the average cost of fuel or an additional $18.05 per barrel, up from $101.83 per barrel in 2010 to $119.88 per barrel in 2011. The increase in fuel costs resulted in an additional $18.12 million being spent on fuel during the current year. The increase was also due to a 34.0% increase in the average price paid to the Bermuda Government for kWh generation received from the Tynes Bay incineration plant during the year as BELCO paid $1.79 million for 11.94 million kWh (2010: $1.39 million for 12.36 million kWh).

Increases noted were offset in part by improved Central Plant efficiency and decreased generation volumes related to lower kWh demand. Average efficiency for 2011 was 702.5 kWh per barrel of fuel consumed, as compared to 689.9 kWh per barrel in 2010. This translates to 18,295 fewer barrels consumed and fuel savings of $1.86 million. BELCO tries to take advantage of temporary declines in world fuel prices by purchasing fuel shipments ahead of their delivery date. In 2011, these forward purchases of fuel resulted in savings of approximately $5 million in comparison to what would have been paid had the fuel been purchased at contract prices. Also during 2011, BELCO entered into a new contract with a new supplier of fuel oil for its generation plant, resulting in fuel cost savings of $2.54 million. The total savings of approximately $7.54 million enabled BELCO to charge its customers a lower fuel adjustment rate.

BELCO invested $21.7 million in capital projects in 2011 compared to $29.5 million in 2010.

Included in the 2011 amount was some $3.6 million, for the North Power Station project. This project was budgeted to cost approximately $70 million over four years, involving the design and construction of three 14 megawatt (MW) diesel generating units plus associated work. These engines were scheduled to begin commercial operation in July 2013 and formed an integral part of a multi-phase Central Plant development plan that supported the future introduction of large-scale renewable energy obtained through wind, solar and waste-to-energy production.

The introduction of these engines is essential to meet Bermuda’s future energy demand, as three less efficient existing engines are scheduled for retirement in 2013, as are all East Power Station Phase I engines in 2017. However, in February 2012, BELCO received notice from Government’s Energy Commission that its October 2011 submission to increase basic tariff rates with effect from 1 January 2012 had been rejected. The rates increase is essential for BELCO to secure financing for the North Power Station project. The Commission’s decision was appealed by BELCO to the Minister of Environment, Planning & Infrastructure Strategy and on 9 May 2012, BELCO received notification that the appeal had been rejected by the Minister with respect to the basic tariff rates increase. 

At the time of writing, BELCO is considering its legal options. If the Minister’s decision stands, then the North Power Station project will not proceed, leaving BELCO with no choice but to continue to meet Bermuda’s future energy demand with older, less efficient and less reliable generation plant. The rejection of the rates increase will also have an impact on other capital projects.  For example, in 2011 BELCO commenced logistical work in preparation for the Prospect-to-Flatts transmission cable replacement in 2012; however, as a result of the Minister’s decision this project has been deferred. This project is considered extremely important, as it would allow very old, problematic and operationally expensive 22 kV cables on the eastern portion of the Island to be retired, providing a more secure link to the Flatts substation and mitigating possible overloads on Fort Hamilton feeds to Flatts.

Finally, in releasing its year-end results, Ascendant Group noted that A.L. Vincent Ingham, who was responsible for the company’s strategic direction as a Director, President and Chief Executive Officer, retired at year end, on 31 December 2011. Plans to replace Mr. Ingham are well underway.

As the global economy recovers, Bermuda needs to adopt a truly global perspective and be in a position to offer an outstanding environment in which to do business. Ascendant Group intends to be a source of support and growth, building on strong relationships and entering into public-private partnerships to ensure the success of our businesses and Island.  Ascendant Group is proud to be an employer, service provider, business partner and purchaser of goods and services. Ascendant Group is also a corporate citizen that enhances quality of life, and is committed to being an attractive investment.