Belco Holdings Ltd. yesterday reported virtually flat profits for the first half of 2006 as local residents conserved energy in the face of rising fuel costs.

The utility group said net earnings fell 2.1 percent to $8,355,586 from $8,539,139 in the first six months of 2005 as expenses rose 13.27 percent and demand edged up just 1.69 percent.

?Sales to residential customers remained flat compared to 2005 sales, only increasing 0.09 percent,? Belco chief executive officer Garry Madeiros said in a statement.

?While there was a 1.64 percent increase in the average number of new metered connections, the average consumption of the residential customer decreased by 1.52 percent.

?This decrease may be driven by a deliberate effort to conserve electricity in response to increasing fuel adjustment charges brought about by the high cost of fuel.?

Belco noted that overall expenses rose with fuel price increases making up almost 90 percent of the increases as the cost of a barrel of fuel surged 28.89 percent to $75.99 in the period.

While revenue from electricity sales rose 13.34 percent, this was due almost entirely to a 58.6 percent increase in in fuel adjustment revenue from $13,262,993 in 2005 to $21,036,626 in 2006.

?The increase in fuel adjustment revenue, which accounted for 79.75 percent of the total increase in electric energy sales revenue, is offset by an identical increase in fuel cost, which is reflected in energy supply expenses,? Belco said. ?The company has not benefited from these rising prices.?

Actual consumption of fuel rose by only 1.69 percent, the company said, with residential use flat and sales to large demand customers up 2.72 percent compared to the same period in 2005.

Belco subsidiary Bermuda Gas & Utility Company Ltd.?s net income for the first six months of 2006 fell 34.9 percent to $450,012, compared with $691,123 in the same period of 2005.

?This is primarily due to a 24.9 percent reduction in appliance sales attributed to changes in the showroom location during the current period, and supply issues experienced with a significant vendor,? the company said.

?It is anticipated appliance sales will improve during the remainder of the year with the new showroom firmly established at its new location on Church Street providing easier access to its customers, and the supply issue being resolved.?

Gas sales rose 11.1 percent due to increases in both volume and gas prices. Service and parts sales have also increased 1.87 percent.

On August 31, 2006, the company issued a 100 percent stock dividend to shareholders of record on August 15, 2005.

This increased the company?s capital stock by 5,140,398 shares. As of August 31, 2006 the stock price was $21 the equivalent of a $42 price before the stock dividend.