Belco's consolidated net earnings for last year fell 5.64 percent, despite a big increase in fuel costs for customers over that period.

The utilities company saw its net earnings drop to $20.4 million in 2007 from the $21.6 million the previous year.

Meanwhile, overall electricity sales increased less than projected during last year. This was a direct result of conservation from higher fuel costs reflected in the fuel adjustment rate, as well as milder summer temperatures.

Earnings were also affected by a significant write-off of the Belco inventory during the year, in addition to contract penalties paid due to cancelling the planned development of a new Bermuda Gas warehouse.

Belco ended 2007 earning $19.2 million, compared to $20.6 million in 2006.

Although the number of residential customers increased 2.53 percent from 30,917 to 31,699, the average kilowatt per hour (kW/h) usage per customer decreased from 730 kW/h to 726 kW/h per month.

A year-long review of Belco's physical inventory resulted in the write-off of $1.8 million in inventory. The review was done in conjunction with the redesign of the warehouse layout, which will allow for inventory consolidation and implementation of new processing systems.

The company also paid $684,000 to contractors in contract cancellation penalties and development costs incurred to date to build a new Bermuda Gas warehouse so that the property could be incorporated into plans for expansion of the central power plant site.

The cost of fuel increased $5.7 million in 2007 to $85.8 million from $80.1 million in 2006, with the average price 6.3 percent higher than the previous year.

The cost of fuel reached its highest level ever in July with Belco paying $89.17 per barrel for heavy fuel oil and $109.85 for No.2 diesel oil. This resulted in the fuel adjustment rate reaching a new high of 11.50 cents per kW/h, accounting for approximately 36 percent of the average residential customer's bill.

But, as a result of improved utilisation of new plant, Belco was able to achieve greater fuel efficiency of 705 kW/h per barrel of fuel, compared to 702 kW/h in 2006, which softened the price impact. The peak load remained essentially unchanged at 117.7 megawatts, compared to 117.2 in 2006.

Bermuda Gas ended the year with net earnings of $1,127,895, a significant 57.38 percent improvement over 2006 results. This increase in earnings is largely attributed to increased gas sales, as well as better results from appliance sales due to a full first year at the centrally located City of Hamilton premises.

The company's Annual General Meeting will be held on Thursday May 22 at the Bermuda Underwater Exploration Institute at 3.30 p.m.