Power company Belco Holdings improved its earnings by $1.2 million despite encountering difficulties in its Bermuda Gas operation caused by moving its city centre store and a transition in its warehousing facility last year.

And the company also spent $10.8 million on a new state-of-the-art switchboard to replace the two destroyed in the July 2005 fire at the Pembroke power station.

That outlay was part of just over $31m of investment in property and equipment made by Belco during 2006 and reported in the company's first quarter report, released today.

Greater demand by large commercial users and the more residential use, which has been attributed to an increase in homes on the Island, are noted in the report.

For investors there will be a dividend of 20.25 cents for the opening quarter of the year.

The energy supplier is currently involved in a dispute with the Electricity Supply Trade Union, which threatened a 21-day strike earlier this month in relation to a new two-year collective agreement involving wage and salary settlements. The Minister for Labour Derrick Burgess has now placed the dispute in the hands of the Permanent Arbitration Tribunal and a hearing is expected to commence in mid-April.

Belco president and chief executive officer Garry Madeiros ends his tenure at the helm of the company at the end of the year.

The company will hold its annual general meeting on May 7 and present an update on consultations regarding Belco's Electric System Discussion Document. The company will also release its annual report during the final week of April.

Belco Holdings consolidated earnings for 2006 were $21,618,657 — 5.86 percent up on 2005 when the figure was $20,421,118.

"These positive results are attributed to greater demand for electricity in all sectors and improved fuel efficiency resulting from a full year's performance of the two new engines installed in 2005," said Mr. Madeiros.

The company estimates the new engines resulted in a saving of $2.25m.

Bermuda Electric Light Company earnings were $20,659,192 compared to $19,164,725 from normal operations in 2005. There was a 4.67 percent increase for demand in electricity by the "large commercial sector", while overall electricity sales increased by 2.39 percent.

The increasing number of homes in Bermuda was also evident.

Mr. Madeiros said: "Residential sales were 0.85 percent higher than 2005, primarily due to a 1.39 percent increase in new residential meters, indicative of an increase in the Island's housing stock."

On the investment side, apart from the $10.8m spent on the new Phoenix switchboard facility, there was a further $2.3m used to enhance the underground supply to the King Edward VII Memorial Hospital and a further $1.6m reinforcing the cable link between the Pender Road and Boaz Island substations.

Improvements were also carried out on the oily waste water treatment plant.

The electricity generating and supply side of the company saw its operating costs increase $15,251,453 (10.66 percent) to $158,341,950 and this was put down mostly to an increase in the price of oil. The average cost of a barrel of oil rose from $65.26 in 2005 to $79.36 in 2006 which resulted in $13.9m additional fuel costs.

Fuel costs totalled $80m for the year.

Two new generator sets added to the East Power Station in 2005 were the main contributing factor for fuel efficiency that has gone from 678 to 702 per kilowatt hour in the past two years.

Referring to the changes at Bermuda Gas, which ended the year with net earnings of $716,672 compared to $1,093,421 in 2005, Mr. Madeiros reported: "Appliance sales were 6.44 percent lower, service and parts were 0.63 percent ahead and gas sales closed 10.23 percent up.

"In July Bermuda Gas moved its showroom from The Stables building on Reid Street to the Boyle Building in the centre of the city and is now experiencing greater walk-in business."

Belco Holding shares closed on March 21 at $23.00, up from $20.17 a year ago.

"Taking into account the 100 percent stock dividend paid on August 31, 2006, this represents a 14 percent increase in the market price of the shares. Again, taking into account the 100 percent stock dividend, earnings per share from operations ended the 2006 year at $2.10, up 5.53 percent from the $1.99 in 2005," said Mr. Madeiros.

As he prepares to retire as CEO and president Mr. Madeiros will hold a cocktail party after Belco Holdings' annual meeting to be held in May at the Bermuda Underwater Exploration Institute.