Electricity price increase needed to fund new £30m. cable to Jersey

It comes on top of the expected 6.8% rise likely to be in place for three years from July.

The cable will be replaced after failing in October. It is currently only supplying a third of the island's power needs when the expectation would normally be for 90%.

'The reliance on local generation means that emissions have increased by around four fold and additional generation costs are running at between £800,000 and £1m per month,' States' Trading Supervisory Board president Peter Ferbrache said.

'GEL is forecasting a financial loss of £5m. for the current financial year. By any measure, this is not a tenable position.'

The company has now entered into a contract for a replacement cable which is now being manufactured. It is expected that the new cable will enter service this October.

The original cable was installed in 2000 by ABB HVC, a company which was recently acquired by NKT.

NKT has won the new deal.

'GEL has assured my Board that the post-tender negotiations that were undertaken with NKT included significant discussions about the existing cable and its performance, given its anticipated design life of 25 years. The manufacturer worked proactively with GEL to assess and understand these issues and the impact of the repairs that have been necessary. As a result, a commercial settlement agreement has been reached between GEL and NKT in lieu of the existing cable's historic performance as part of this contract.'

The terms of the settlement are confidential, he said.

'GEL's business case for the new cable is based on an assumed tariff cost increase of 2.7% to fund the capital and interest payments involved. To put this into perspective, this equates approximately to an additional £29 per annum for an average Economy 12 customer.'

The regulator will need to approve the price rise.

The cable first failed unexpectedly in 2012, while a pre-emptive repair was carried out in 2015 after monitoring identified a problem.

'I have to advise the Assembly that there remain significant concerns over the cable's integrity. Ongoing monitoring since the cable was re-energised has identified at least one further potential off-shore fault. The fibre optics that run through the cable have failed at the location concerned. These failures mirror the type of behaviour exhibited by the cable prior to the events in 2012 and 2015 and suggest that another failure is likely.'