Difference between tariffs ‘down to numerous factors’

It was recently claimed by Jersey Electricity chief executive Chris Ambler that electricity is 15 to 20% cheaper in Jersey than Guernsey.

He believes this is due to the composition of their imported power from France as it is two-thirds nuclear and one-third renewable hydroelectric.

Regarding these claims, Guernsey Electricity’s chief executive officer Alan Bates said it was difficult to compare individual tariffs on a like-for-like basis, as the tariffs were structured differently on the two islands.

‘There is actually only an 11.6% difference in the average price between the two islands,’ he said.

‘This difference is caused by many factors, including the different size of the two markets when compared to reasonably equivalent fixed costs (i.e. economies of scale) and the location of the island which, by virtue of being further from France, results in greater electricity transmission losses.

‘The other key factor is the different security criteria applied by each island, with Guernsey adopting a higher level of security against loss of supplies from France.’

Mr Bates said Guernsey Electricity also supported the transition into renewable energy.

‘The world of energy is believed to be changing more quickly and fundamentally than at any point since the industrial revolution.

‘Guernsey Electricity supports and promotes this transition. It is also fully supportive of embedded renewable generation and storage, provided the transition remains affordable and delivers the best outcomes for the island.

‘A key question for Guernsey is how will States policy, the regulatory environment and governance surrounding the market structures keep pace with this rate of change and encourage much-needed innovation on the island.

‘A revised energy policy will give much greater clarity on the future direction and how we as a community manage the journey to be successful.

‘On a small island jurisdiction, such as Guernsey, the issue will not only be how we strategically manage this transition, but how we make it fair and equitable to all consumers and not disadvantage some who will need to continue to rely on existing services for some time to come.

‘For Guernsey Electricity, the first step in making the energy transition fair to all our customers is a complete review of our tariffs and charges, to ensure costs are appropriately recovered from all customers.’

Mr Bates also said that Guernsey Electricity was working closely with the States regarding their readiness for Brexit.

‘We keep a close eye on the EU exit process as Guernsey Electricity buys the majority of its electricity for the island from Europe in Euros.

‘We manage these risks on both a commodity and foreign exchange level and our long-term contract structure with Electricite de France allows us to minimise short-term spikes and optimise our commodity import price.

‘Furthermore, we continue to manage any foreign exchange risk through our hedged forward contracts programme, which aims to achieve as smooth as possible Euro import cost profile.

‘As a company we continue to work very closely with the States of Guernsey on both readiness and contingency planning for Brexit.’