Rapidly falling demand for electricity has impacted the earnings of Ascendant Group, the parent company of Belco.

The company has reported core earnings, before corporate expenses, of $11.9 million for the third quarter, which is $900,000 down on the same period last year.

Meanwhile, the company’s core earnings from operations for the first nine months of the year were $22.9 million, a drop of $4.3 million year-on-year.

In a statement, the company said the drop in its core earnings was largely the result of lower revenues arising from lower electricity demand and higher depreciation period over period at Belco. It noted that maintenance savings of approximately $1.4 million were offset by a reversal of regulatory fees in the prior year.

Sean Durfy, chief executive officer, said: “It’s been a challenging first nine months of this year for Bermuda Electric Light Company, 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 per cent to the net income of the Ascendant Group.”

Commenting on projects and initiatives related to Belco’s power generation and transmission and distribution businesses, Mr Durfy said: “We have made significant regulatory progress with the public consultations well advanced on both the Integrated Resource Plan, 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, the Battery Energy Storage System and upgrading our transmission and distribution system is progressing well. The North Power Station will usher in a new era for Belco with four 14MW 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.”

For the first nine months of the year, Ascendant’s non-utility businesses has achieved core earnings growth of $600,000, or 20 per cent, 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 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.

The company said reported earnings were impacted by the changes to core earnings 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 million in noncore 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.

Capital expenditures for the first nine months of 2018 were $54.8 million compared to $13.9 million for the same period of 2017. The company said this reflected the execution of its capital plan and progress on the North Power Station.

Ascendant’s share price has risen to $16.50, a 69 per cent increase since the start of the year.

This year, up to the end of September, Ascendant has repurchased 388,784 of its shares, at an average cost of $16.02. A quarterly dividend of 11¼ cents has been declared, which will bring the total dividends for the year so far to 45 cents.

Looking ahead, Ascendant said it was making significant progress on its strategic plan. It has approved $55 million of its five-year $124 million transmission and distribution capital plan and work has 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.”