Fortis TCI has announced it is about to change its accounting procedures. Eddington Powell, a Cayman Islander and CEO of the local privately owned monopoly, has announced a seminar for employees to lay out the new accounting procedures, which are said to conform to US standards.
Fortis Energy, a Canadian firm, operates six energy utilities in Canada and one in the Cayman Islands, as well as Fortis TCI. The last public statement of the eight Fortis operations indicated the local operation here generated profits of over $10 million from a customer base numbering only 9,000 consumers.
While the internal operating statements of Fortis TCI have yet to be made public, it has long been suspected that the utility uses accelerated depreciation to write off capital expenditures quickly and therefore reduce their publicly reported profits. US accounting practices require that capital equipment and assets be depreciated more closely in line with the life expectancy of the asset, reducing the annual write off and therefore showing a more accurate, and possibly higher net profit.
It has been reported that Governor Ric Todd has been active in examining the extremely high prices charged to both residential and business customers in the TCI. Rates in the TCI are five times higher than those charged by the closest mainland utility Florida Power and Light (FPL). Recently, when Fortis TCI attempted to enforce yet another rate increase based on fuel costs, Todd insisted the utility freeze prices for one year.
If the new accounting procedure results in profits higher than the 17 percent allowed in the agreements between Fortis and the government, the utility may have to reduce its prices.
Fortis has been making very extensive investments in equipment and buildings in the last calendar year. If those improvements were depreciated over a short term this would reduce the stated profits and qualify them for a rate increase.