Ascendant Group Ltd, which owns Belco, saw its profits fall 15 per cent, to $970,000, in the first six months of this year.

The closure of Bermuda Gas & Utility Company’s residential appliance and service business acted as a major drag on the group’s operating income.

For the first six months of the year electricity sales volume was up, driven by an increase in demand for residential use.

The 1.4 million kilowatt hour (kWh) sales volume increase, represented a 0.5 per cent rise year-on-year, and has been attributed to higher early summer temperatures, which resulted in greater use of appliances such as air conditioning units. An audit of electricity meters also improved billing, the company said.

Although residential sales of electricity improved 2.1 per cent, there was a 2.8 per cent decrease in the volume of commercial sales, which the company said reflected “the continuing decline in certain sectors of the economy, combined with energy efficiency and conservation measures”.

Electricity sales volume for the six months totalled 267 million kWh.

Excluding the impact of discontinued operations and non-recurring charges associated with the restructuring and closure of Bermuda Gas’ residential appliance and service business, the group reported operating income of $3.2 million, an improvement of $1.5 million on the same period in 2014. This was achieved through higher electricity sales revenue and lower operating costs.

Closing the residential appliances and service side of Bermuda Gas resulted in a one-time restructuring charge of $1.4 million.

“The decision to close these business lines was difficult, but reflected a realistic recognition that continuing operating losses associated with these segments could not be turned around in a reasonable time frame,” the company stated in its six-month report to shareholders.

Excluding the restructuring charges, Bermuda Gas made an operating profit of $656,000 during the first six months of this year, down 16 per cent year on year.

However, Ascendant noted: “With a more focused business and the potential for lower propane commodity pricing, Bermuda Gas is much better positioned for the future.”

Between the start of the year and June 30, losses from all discontinued operations across the group totalled $2.3 million.

Depressed sales in the commercial market, which were noted in the electricity revenue figures, were also a factor in the 38 per cent reduction in net income of Air Care Ltd, which is wholly-owned by Ascendant.

Air Care’s net income was $818,000. In its report, Ascendant stated: “The reductions in gross sales and earnings reflect continuing challenges in the commercial sector of the Bermuda economy, resulting in cancellations and/or reductions in scope in Air Care’s maintenance agreements.”

The impact of cheaper global oil prices was evident, with Belco’s fuel adjustment sales falling $9.3 million, or 22.8 per cent. Belco paid an average cost of $107.02 for a barrel of fuel in the first half of this year, which included a variety of costs associated with transport, storage, taxes and duty. This compares with the $129.24 per barrel it paid during the corresponding period in 2014.

At the start of June, Belco submitted a request for a tariff adjustment to the Energy Commission and is awaiting a determination. The deadline for the response is the end of this month.

Ascendant’s operating and administrative expenses decreased $3.7 million, or 8.9 per cent, primarily due to lower operations and maintenance expenses at Belco, according to the report.

Belco is currently involved in replacing approximately 4,400 street lights across the Island with LED (light emitting diode) fixtures, which the group said are long-lasting and energy efficient. Belco, in conjunction with LED Roadway Lightning, was awarded the contract in June from the Bermuda Government. The company expects the project to be completed in 2017.

In his note to shareholders, Ascendant’s president Walter Higgins, wrote: “We expect to take many innovative steps to enhance Bermuda’s energy future and will do so within the context of the new Electricity Act, which will provide both opportunities and challenges for Ascendant Group, as the industry structure and regulatory environment goes through fundamental change.

“At the same time, we will continue to adjust our business model as we address Bermuda’s changing economic landscape, which we are confident will recover with stimulus, including the 35th America’s Cup.”

He added: “Ascendant Group’s ultimate success is directly linked to the Island’s growth, stability and prosperity, and what is good for Bermuda will inevitably be good for our shareholders, employees, consumers and the community at large.”

Ascendant Group prepared its 2015 consolidated interim financial statements for the first time in accordance and compliance with International Financial Reporting Standards.