States’ utilities profits could be kept by them
A NEW vision has been set out for States-owned utilities to allow them to operate with a more ‘commercial mindset’.
In future, Guernsey Post, Guernsey Electricity, Aurigny and Jamesco [the holding company for the island’s fuel tankers] may be allowed to put their profits back into their respective businesses, instead of it being ploughed into general revenue.
States’ Trading Supervisory Board president Peter Ferbrache was giving his quarterly update when he outlined the idea to give the companies more freedom.
‘STSB is unanimously of the view that, in the long term, the unincorporated and incorporated trading assets should operate on a not-for-dividend basis, any returns generated through their commercial activities should instead be reinvested into the individual businesses, in the best interest of their customers.
‘That will provide social benefits, through minimising the cost to islanders of these everyday essential services.’
The four States-owned businesses already have their own boards of directors in charge of long-term business plans and delivering the strategic objectives and responsibility for efficient management and operation lies with their individual company boards and management.
STSB does not get involved in the day-to-day running of the businesses, although it is involved in high-level decision-making.
Deputy Ferbrache stressed the new set-up would be good news for customers.
‘We are now seeing the benefits of these arrangements reflected in a more commercial mindset throughout the organisation, with greater focus on value, service, efficiency, and customers.
‘Of course, acting commercially does not always mean delivering maximum financial return.
‘Our trading assets’ primary purpose is the essential services that they deliver to islanders, it is very clearly not all about maximising profits for the shareholder.’
Electricity prices are rising for the first time in seven years to pay for both commodity costs and currency fluctuations and are expected to go up again to pay for the new cable link with Jersey.
Deputy Ferbrache said it was inevitable that there would be occasions when prices have to rise
‘Guernsey Electricity is a very relevant example, as it is now having to raise tariffs as a result of external events entirely outside of its control, following seven years with no price increases, that sort of action is sometimes unavoidable.
‘Equally though, there is a focus throughout the trading assets on efficiency and containing costs.
‘That has, for instance, enabled Guernsey Water to freeze bills this year, at the same time it adjusted the respective charges for water and wastewater, to better reflect the cost and investment in delivering these services, to be fairer to all customers.’
As part of his round up of his committee’s activities, Deputy Ferbrache responded to a question about the runway.
‘I think anything in relation to the runway is a dead duck during this particular States,’ he said.