Caribbean Utilities Company (CUC) has reported a sharp rise in quarterly profits as many Cayman Islands households continue to struggle with higher electricity bills, intensifying scrutiny of the cost of power during an ongoing cost-of-living squeeze.

The monopoly electricity provider said net earnings increased by 31% to US $15 million for the three months ended 30 June, up from US $11.5 million in the same period last year. First-half earnings rose to US $22.2 million from US $19.1 million.

The improved performance was driven by a rebound in electricity demand following a weather-affected first quarter, lower depreciation costs after changes to the accounting treatment of generating assets, and a regulated increase in base electricity rates that took effect on 1 June.

Political pressure over power costs

The results come as electricity costs remain one of the Cayman Islands' most politically contentious cost-of-living issues.

Successive increases in fuel charges, alongside annual adjustments to CUC's regulated base rates, have pushed household bills higher. In response, the Cayman Islands Government introduced a CI $9 million summer fuel relief programme to subsidise residential electricity costs, saying households faced a projected increase of more than 70% in fuel charges during the summer as global fuel prices rose.

The latest base-rate increase also prompted political criticism.

Speaking on 15 July, Opposition Leader Joey Hew questioned why the increase was allowed to proceed when similar adjustments had been deferred during previous periods of economic hardship.

"The unanswered question is this: If scheduled CUC base-rate increases were deferred in 2020 and again in 2022 to provide consumers with temporary relief during periods of economic hardship, why was a similar approach not pursued in 2026?" he said.

The Utility Regulation and Competition Office (URCO) said the increase was calculated under the Rate Cap and Adjustment Mechanism set out in CUC's 2008 licence and was not a discretionary decision by either the regulator or the Government.

URCO acknowledged that the increase had "understandably caused concern in the community, particularly at a time when many households are already under pressure from higher fuel and living costs".

Fuel costs and regulated profits

While customers have faced significantly higher electricity bills, CUC said much of the increase reflected higher global fuel costs rather than changes to the utility's regulated earnings.

Fuel costs are passed directly to customers without mark-up. The company said those costs rose sharply after international oil prices increased amid geopolitical tensions in the Middle East, with the average fuel price paid by CUC increasing 48% year on year during the second quarter.

At the same time, the company's earnings were lifted by factors unrelated to fuel costs.

These included the 2% increase in regulated base rates, reduced depreciation after regulators approved extending the operating lives of eight generating units, and a 4% recovery in electricity sales following the weather-related slowdown earlier this year.

Chief executive Richard Hew said the company remained focused on improving efficiency while reducing long-term energy costs.

"As CUC marks its 60th anniversary year, the Company is proud of its enduring contribution to Grand Cayman's community," he said. "CUC remains focused on energy efficiency and the clean energy transition, especially utility-scale solar to deliver lower energy costs."

Renewables and demand growth

The company said investments in its Battery Energy Storage System and upgrades to generating units reduced fuel consumption, producing an estimated US $2 million in fuel-cost savings during the quarter that were passed directly to customers.

CUC is also awaiting the outcome of a tender for a proposed 22.5-megawatt utility-scale solar project, which it describes as the largest renewable energy project in Cayman Islands history.

The utility said continued strength in the domestic economy, particularly tourism, had also supported electricity demand. The Cayman Islands recorded a record 64,213 stayover visitors in March, while arrivals in May rose 16.5% year on year to 40,015.

CUC invested US $22.5 million in infrastructure during the quarter, primarily on distribution upgrades and generation assets, and maintained an annualised dividend yield of 5.4%.

CUC said it expects continued economic growth and stronger electricity demand to support future earnings. Whether households see meaningful relief from high electricity bills is likely to depend less on the utility's financial performance than on global fuel prices and the pace of the islands' transition to lower-cost renewable energy.