This document summarizes Water en Energiebedrijf (W.E.B.) Aruba N.V.'s presentation to Parliamentary committees regarding a proposed electricity tariff increase. It outlines that W.E.B. has accomplished a 40% reduction in heavy fuel oil consumption through investments but faces rising fuel costs and a drop in electricity sales. Without a tariff increase, W.E.B. projects ongoing losses, inability to fund future operations and investments, and non-compliance with financial covenants. The proposed tariff increase would allow W.E.B. to further reduce fuel consumption and increase renewables while improving its financial position and compliance with financial ratios.
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Aumento Tarifa di Coriente - Facts & Figures
1. Electricity Tariff Increase
Water en Energiebedrijf (W.E.B.) Aruba N.V.
The roadmap to HFO reduction & renewable energy increase
Presented to Parliamentary Energy
& Financial Committees Sept. 4, 2014
2. Presentation contents
Accomplishments till now
Current realities
The road ahead
Financial state/outlook
The roadmap to HFO reduction & renewable energy increase 2
3. Accomplished till now
W.E.B. Aruba N.V.’s strategy for 2005–2013:
Total investments for 2005-2013 of Afl. 450 Million.
Total HFO reduction of approx. 40% or Afl. 160 Million/year.
Realized renewable penetration of 17%.
The roadmap to HFO reduction & renewable energy increase 3
4. RECIP 1
24 MW RECIP 2
6,180 6,166 6,227
24 MW
SWRO1
8,000m3
5,635
5,296
WP Vaderpiet
30 MW
4,922 4,992
4,172
3,791
3,716
3,543
$36.13
$46.27
$51.99
$77.66
$55.40
$73.13
$99.02
$102.83
$97.13 $97.51
$120
$100
$80
$60
$40
$20
$-
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
HFO Price in USD/Bbl
HFO Consumption in Bbls/Day
HFO Bbl/Day HFO (all-in) Price
RECIP 3 & WHRB
44 MW
SWRO2
24,000m3
4
Accomplished till now
40% reduction in HFO Consumption
while prices increased with 170%
The roadmap to HFO reduction & renewable energy increase
5. Current realities
Increase Fuel Oil expenses
Increased handling fees from US$ 2.40 to 6.50 (by Valero).
Change of invoicing method to delivered price (by Valero).
Higher Fuel Oil consumption (WEB), due to:
• Equipment not operating at optimal efficiency levels.
o Increased wind energy production
Drop in electricity sales combined with a high peak demand.
The roadmap to HFO reduction & renewable energy increase 5
6. Current realities
Correlation between monthly tariff vs. Fuel Oil pricing 2005 - 2014
The roadmap to HFO reduction & renewable energy increase 6
7. Current realities
The roadmap to HFO reduction & renewable energy increase
7
RELIABLE AFFORDABLE SUSTAINABLE
8. Current realities
The year-to-date result up to July 2014 + the forecasted trend
provide the following outlook, if the tariff is not increased:
Current realities in Afl. in Millions & Ratio's Norm 2013 2014 2015 2016 2017 2018
Cash at end of period - before increase (15.0) 3.7 (20.4) (42.5) (68.2) (77.8) (87.5)
Net profit before tax 18.0 (3.1) (1.8) (7.5) (8.0) 1.6 (1.2)
Debt Service Coverage Ratio 1.30 0.92 1.34 1.14 1.11 1.25 1.26
Equity Ratio 0.50 0.49 0.48 0.46 0.43 0.45 0.47
Current Ratio 1.00 1.18 1.16 0.96 0.79 0.72 0.68
The roadmap to HFO reduction & renewable energy increase
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Outlook is negative:
Insufficient funds to fund operation and future investments
Poor financial performance resulting in yearly losses
Non-compliance with financial covenants – unable to obtain financing
9. The road ahead
Strategy WEB Aruba for 2014–2018:
Further reduce dependency on Heavy Fuel Oil.
Enhance production plant automation with Intelligent
Generation Management System (IGMS)
Introduce Energy Storage solutions
Further implementation of affordable renewable technologies
The roadmap to HFO reduction & renewable energy increase 9
10. The road ahead
Strategy WEB Aruba for 2014–2018:
Investments for 2014-2018 of Afl. 211 Million.
Realize an extra HFO reduction of approx. 20% or Afl. 80
Million/year.
Increase renewable penetration from 17% to approx. 40%.
The roadmap to HFO reduction & renewable energy increase 10
11. 11
The road ahead
60% HFO reduction compared to 2005
The roadmap to HFO reduction & renewable energy increase
12. Financial outlook
Tariff adjustment required! The adjustment is based on the
following assumptions:
Income/expenses:
Reduced electricity sales for 2014, 2015 and 2016
Reduced operating expenses
Investments:
Delayed Windpark Urirama
Delayed SWRO III (fixed plant)
The roadmap to HFO reduction & renewable energy increase 12
13. Increase Electricity tariff to ELMAR as of October 1st, 2014. The
financial impact is as follows:
Cashflow in Afl. in Millions Norm 2013 2014 2015 2016 2017 2018
cash at end of period - before increase (15.0) 3.7 (20.4) (42.5) (68.2) (77.8) (87.5)
cash at end of period - after increase (15.0) 3.7 (19.5) (19.3) (23.2) (13.0) (2.8)
cumulative increase in cashflow 1.0 23.2 45.1 64.7 84.7
Financial outlook in Afl. in Millions & Ratio's Norm 2013 2014 2015 2016 2017 2018
Net profit before tax 18.0 (3.1) 5.4 20.4 19.3 28.9 26.0
Debt Service Coverage Ratio 1.30 0.92 1.49 1.71 1.66 1.67 1.73
Equity Ratio 0.50 0.49 0.49 0.50 0.51 0.56 0.61
Current Ratio 1.00 1.18 1.22 1.23 1.17 1.23 1.35
Based on actual figures up to July 2014 and forecasted figures for remainder of the years.
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Financial outlook
The roadmap to HFO reduction & renewable energy increase