Electricity faces ‘big decision’ to replace or repair sea cable
GUERNSEY ELECTRICITY has ‘big decisions’ to make on the future of the damaged subsea cable linking the island to Jersey, including potential replacement, and will have to put tariffs up to cover any costs.
CEO Alan Bates was speaking as the cable, which was damaged and repaired last year, was still not fully operational after a second issue was discovered 9km offshore.
Tests to understand fully the reason for the new damage are on hold due to the equipment needed to do them being repaired in France. ‘There is a forensic investigation being carried out to see what caused the fault in October,’ said Mr Bates.
‘We will be talking with the manufacturer to find out what that means for the cable in terms of its lifespan.
‘Once the equipment is back, and the cable is assessed for the cause of the current issue, a decision will be made on whether to repair it or replace the cable.’
While the cable is currently running at less than full capacity, the additional cost of supplying electricity is 20% more than usual, due to the power station being used to make up the difference.
The expected cost of replacing the subsea cable between the islands is between £30m. and £35m.
While a subsea repair would normally be between £5m. to £7m., the last time one took place in Havelet Bay, it cost just over £5m.
‘These are really big decisions to make,’ said Mr Bates.
‘If we are going to repair, will that give us further use of the cable with enough time to get on with the Guernsey to France cable project?
‘Or if we do another repair like on the beach in Jersey, will another issue pop up?
‘There is a conversation going on, we want to understand all the evidence from the testing then we can make a more informed decision about repair or replace.’
The company had been investigating installing a second link direct to France.
Insurance would not cover the current problems with the cable and the decision on how to recover the costs of repairing or replacing it is an ongoing conversation.
‘Last year we were very open to say all our underlying costs have increased and we have not put tariffs up for six years,’ said Mr Bates.
‘We have now got into the position where we cannot afford to reinvest in the business, we have to put tariffs up.
‘This needs to be passed onto ratepayers, potentially this year.
‘With the cable being out of service for two months last year and with a reduced capacity now, it is costing us more as a business to generate and to repair it all the time.
‘We are looking at this with the board and the shareholders to say how will that cost be recovered.
‘Shall we just recover it now and put prices up quite a lot?
‘Or shall we take a much longer term view and recover that from the customer base over a much longer period?’
Mr Bates added there would not be clarity on replace or repair for a couple of weeks, but talks with the regulator and shareholders about tariff increases were ongoing.