Deputy questions if island is heading right way on energy
SOCIAL and environmental concerns should be as important as financial ones when looking at funding the proposed new cable link between Guernsey and Jersey, said Deputy Jennifer Merrett.
She remains concerned at how Guernsey Electricity is going to fund the Jersey link and is also worried about the impending increase in tariffs of more than 9%.
‘Is it equitable to indebt future generations?’ said Deputy Merrett.
States’ Trading Supervisory Board president Peter Ferbrache answered 16 questions from the St Sampson’s deputy on electricity price rises and the mechanism for funding the new cable link with Jersey, GJ1.
It showed that Guernsey Electricity had secured a better interest rate on a loan from the private sector than it would have if it had borrowed all of the funds from the States bond.
While the rates obtained were confidential for commercial reasons, Deputy Ferbrache said it was ‘significantly less’ than the 3.625% fixed for 25 years available through the bond.
The bond was taken out to spend on capital projects or to be lent to States-run bodies at favourable costs.
The cable will cost about £30m., but while half of this will be funded through the commercial loan, the remainder will come from the bond.
‘It does give me cause for concern that we are using £15m. over 25 years,’ said Deputy Merrett, referring to the bond aspect. ‘That’s over half a million a year interest – more than £30m. in total. Is that equitable?’
Another concern that Deputy Merrett still has in the wake of Deputy Ferbrache’s replies relates to electricity tariffs.
Guernsey Electricity has not increased tariffs since 2012, but in order to address historic costs it is to levy a 6.8% price rise. But there is to be an additional 2.7% increase which Deputy Ferbrache said is for future capital and interest payments for the new GJ1 cable.
The STSB president said that these two costs ‘should not be conflated. [They] are in respect of two entirely separate issues.’
‘If we want to split hairs, the only person who’s going to be paying for it is the consumer,’ said Deputy Merrett. ‘It’s the same people, whether it’s the taxpayer in the past, present or future.
‘It’s a real concern that this was not discussed with Employment and Social Security. It’s an unexpected increase,’ she said.
‘People who just about manage may need additional help and that’s an additional cost.’
Her final issue is that the cost of the cable is being applied for without any energy policy being approved by the Assembly.
‘We’re now looking to spend £30m. on a cable to last a potential 25 years without any energy policy in place so we can move away from fossil fuels,’ she said.
‘We’re spending millions and millions of pounds without knowing our direction of travel,’ said Deputy Merrett.
She added that she was not saying she thought any of the answers to her questions were inaccurate. ‘I think what they’ve answered is pragmatic and an honest assessment of the situation we are in. We’ve got to sort out how we generate energy in future.
‘If you think about where we live, we should be selling energy to other jurisdictions.’
- In March this year, Deputy Ferbrache told the States that he looked forward to the energy policy being ready ‘shortly’.