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Regulator imposes Sark power price cap

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SARK’S electricity price is to be capped for two years from 1 January, the island’s electricity price control commissioner has announced.

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Dr Anthony White said that the decision was made in the wake of a full investigation, analysis and consultation into the cost of providing power.

He has set the maximum price at 54p per unit (KWh) – 12p below the current price charged by Sark Electricity Limited.

This, he said, is a fair and reasonable price yet still enables SEL to maintain security of supply while providing a reasonable return for its business.

He said his investigation and consultation led to accusations from SEL of bias, collusion and of trying to bankrupt the company.

SEL claimed his basis for the price was ‘flawed and devoid of any economic reality’, but he rejected these arguments as being without merit.

‘The analysis shows that it is the decisions of the directors and shareholders to incur unnecessarily high costs, and seek to recover them from electricity customers, that has led to the current situation,’ said Dr White in his report.

H said it was unacceptable for SEL to try to pass on to customers excessive legal costs it incurred trying to thwart his official cost appraisal.

The report includes a table of accounts based on figures provided by SEL and looking at the estimated impact of a price of 53p/KWh. The final recommended fixed price of 54p/KWh includes an estimated £15,000 ‘allowance for regulatory & legal costs’.

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With the 53p price, the company was estimated to make a gross profit of £516,400 in 2020. Its gross profit in 2017 was £666,2909 and in 2016, £653,369.

Operating profit for 2020 would be £102,337, compared to £223,658 and £113,434 for 2017 and 2016 respectively.

‘I have set the maximum price at a level that would allow a reasonably efficient company to enjoy a reasonable profit, calculated as a return on investment commensurate with the associated risk,’ wrote Dr White.

. SEL managing director David Gordon-Brown has been approached for comment.

Mark Ogier

By Mark Ogier
News reporter

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