Sark Electricity has warned that it cannot continue to operate on the electricity price being 'forced on it' by its commissioner, which was appointed by the Chief Pleas last year.
SEL was to mount a legal battle against the commissioner move this December.
However, a review of the company’s financial affairs by its independent auditors found that although the company could withstand the temporary £20,000 loss per month caused by a new 52p price for electricity, SEL could not afford to mount the legal case at the same time.
Back in December, the tariff was set at 69p per unit.
'We have already suffered through a 40% decline in consumption caused by Sark’s economic collapse and we cannot cut our costs any further,' said SEL managing director David Gordon-Brown.
'A 25% price cut for a company that has already lost £65,000 this year is obviously unmanageable.
'Attempting to operate the company under these conditions would be a breach of my responsibilities as a company director.'
He said if Chief Pleas wanted the company to continue providing power, it would have to provide for the cost of fighting the commissioner order.
'We cannot operate the company at a loss over £20,000 a month under the new pricing scheme nor can we find the money necessary to fund the legal fight.'
He added that if Chief Pleas did not come to the table as a financial backer in time, it would be required to shut down, leaving the island without water or electricity.