October 9, 2001
CUC addresses impact of economic slowdown

Caribbean Utilities Company (CUC) announced today the following initiatives designed to assist its customers and the Cayman Islands economy during the economic slowdown following the World Trade Center and Pentagon disasters:

1. CUC will further suspend a 2% across-the-board rate increase it became entitled to implement August 1 and will freeze its residential and commercial rates at this time;
2. CUC is prepared to assist those customers who have been directly affected by the slowdown on a case-by-case basis;
3. CUC will further promote its Energy Smart program by working with residential and commercial customers to better control their energy consumption and reduce their monthly bills; and
4. CUC will increase its support of the local economy by accelerating construction projects for local contractors while deferring several capital projects requiring direct overseas purchasing.

Electricity Rate Structure

CUC agreed with Government in May to suspend a 2% across-the-board rate increase the Company was entitled to implement August 1. The suspension was to allow the completion of an interim electricity rate review, and it was contemplated that new rates would be introduced November 1. Following discussions held recently with Government, CUC has decided to further suspend any rate increases and defer any changes to its rate structure at this time.

CUC remains committed to following through with a full and proper allocated cost of service study as planned with the view of completing it no later than May 2003. The objectives of the study are to ensure fair, cost-based electricity pricing, eliminate subsidized consumption and develop a demand rate for large consumers.

Customer Payment Terms

CUC is well aware of the challenges some of its customers are currently facing during this economic slowdown. The Company is prepared to assist those customers who have been directly affected by the slowdown on a case-by-case basis. Customers who require assistance with payment terms may contact CUC's Customer Service Department by telephone at 949-4300, by e-mail at service@cuc.com.ky or in person at CUC's North Sound Road offices.

Demand-Side Management/Energy Smart

CUC urges its customers to participate in its Energy Smart program. Energy conservation awareness will help customers better control their monthly electricity bills.

Customers are strongly encouraged to contact CUC's office to obtain energy conservation advice. CUC will also schedule an energy audit if necessary in which a Company representative will visit the customer's home or office and recommend easy-to-implement methods of reducing energy consumption. The audit's benefits will of course vary from customer to customer based on how willing he or she is prepared to follow through with the recommendations made during the audit. CUC estimates that simple "no-cost, low-cost" solutions can result in as much as 10% to 15% savings in energy consumption per customer.

Construction Projects

CUC will defer several capital projects requiring direct overseas purchasing and accelerate approximately $1.5 million in construction projects slated for local contractors. These projects will not significantly affect CUC's rate base as prescribed in its Licence with Government.

Fuel Cost Savings

The price of oil has decreased in the last three weeks due to reduced demand and a slight increase in supply. If this decrease holds, it will reduce the total price that CUC's customers will be billed through reductions in the fuel adjustment portion. If the current reductions continue, customers would on average see their total bills reduce by approximately 4.5% for the same usage. If the oil price continues to drop, this reduction in billings could be even greater. Of course, the opposite is true if oil prices happen to increase.

"CUC clearly understands its role in the community, and we are committed to doing our part to help our customers and the Cayman Islands economy recover from the negative impact of these tragic events," said Richard Hew, CUC Senior Vice-President and General Manager. "We encourage our customers to contact our Customer Service Department (949-4300) with any questions or concerns they may have."

Contacts: Eddinton Powell Phone: (345) 914-1120
Vice-President Finance E-Mail: epowell@cuc.com.ky

Caren Thompson Phone: (345) 914-1107
Corporate Communications E-Mail: cthompson@cuc.com.ky

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