Belco Holdings Limited recorded a 33 percent increase in net earnings for the first half of 2005, but cautioned yesterday that earnings in the second half of the year would be negatively affected by the major fire at Belco?s main plant in July.

Earnings for the first six months of the year rose $2.1 million to $8.5 million, compared with $6.4 million in the first six months of 2004, due to all subsidiaries performing ahead of the 2004 period.

?Overall, the company is very pleased with the first six months of 2005. Results for the second half of this year, however, will be negatively affected by lost sales and increased expenditures stemming from the major fire at Belco?s main plant on July 14 that resulted in an Island-wide blackout,? said Garry A. Madeiros, president and chief executive officer.

The fire destroyed two switchrooms that played a key roll in the transmission of power from the plant to the City of Hamilton, leaving only two of seven feeds to the city. While Belco was able to restore power to all of the outlying areas of the Island and areas on the western outskirts of the city within 24 hours, it only restored power to major portions of the City on the Saturday evening after creating new feeds by re-engineering the system, excavating and reconnecting cables. Holdings? board of directors has commissioned an independent review of the fire, and Government?s Health and Safety Office is also investigating.

?From the time of the fire to now, the reconfiguration of the power system has taken place in four phases to give us maximum security from our currently compromised system. We are in the process of preparing for phase five of the restoration which is the installation of a temporary switchboard facility by November 30. In order to accomplish this, the building damaged by the fire is being dismantled and a temporary room will be re-built. Once complete, this will address many of the current weaknesses in our system, provide us more flexibility, and a much stronger system and back up to the City of Hamilton.?

To date the findings of the various investigations have not yet been released. Mr. Madeiros said however that Belco will keep the community updated on the plant status as well as findings related to the cause of the fire. Belco is also working on long-term solutions to bring on line three engines still stranded as a result of the fire, which will provide further flexibility to the system.

Total kilowatt hour sales for the Bermuda Electric Light Company Limited (Belco) were 3.33 percent higher in the first half of 2005 than in the same period of 2004. Sales to residential and commercial customers rose 4.45 percent and 1.61 percent year-on-year.

Belco attributes the rise in residential sales to a 2.39 percent increase in the number of new metered connections, as well as a 2.02 percent increase in average consumption.

Belco said that a 7.24 percent increase in electric energy revenue in the first half of 2005 over the same period the previous year to increased sales in the residential and commercial sectors, as well as a 3.1 percent increase in fuel adjustment revenue and a 1.5 percent increase in tariff rates granted by the Price Control Commission.

?The increase in fuel adjustment revenue is offset by an identical increase in fuel cost. Fuel prices increased 10.56 percent to an average price of $58.96 per barrel of fuel compared to $53.33 per barrel in 2004,? the earnings statement said.

Belco?s operating expenses rose 4.86 percent over the the first six months of 2004, reflecting the higher fuel prices as well as an increase in energy supply operating expenditures due to the timing of major overhauls.

Overall fuel costs were somewhat offset by an increase in fuel efficiency to 711.48 kilowatt hours (kWh) per barrel in 2005 from 689.30 kWh per barrel in 2004 due to the introduction of two new 14.5 megawatt (MW) base load diesel generators in April of this year.

The 2005 operating expenditures also reflect increases in both staffing and company pension costs resulting from flatter investment market conditions.

Bermuda Gas & Utility Company Limited (Bermuda Gas) saw a 35.8 percent improvement in the period with profit at $691,123 compared to $508,749 in the first half of 2004.

?Overall 2005 year-to-date sales were 11.46 percent ahead of 2004, more than offsetting the increases in related costs, leading to an increase in gross profit from the prior year of 6.44 percent,? Belco said.

Holdings? share price increased 5.26 percent from $39.00 at June 30, 2004 to $41.05 at June 30, 2005. The capital appreciation results in a dividend yield of 3.75 percent.