Sark Electricity boss warns of legal battle
SARK ELECTRICITY has warned of a £1m. legal battle if the latest price control order is enforced.
In a January letter to its customers, the company said it would have to challenge the order – which sets electricity at 54p per unit from this month – because it would not cover the company’s costs.
Sark Electricity wants Chief Pleas to ask the Electricity Price Commissioner to delay his order until Guernsey Electricity has had a chance to finish a valuation of the company.
It is currently charging 66p per unit.
‘When the commissioner tried to set a price control order last year, the commissioner chose to settle out of court just prior to the hearing and Chief Pleas were ordered to reimburse SEL £115,000 on his behalf,’ said SEL director David Gordon-Brown.
‘His total legal fees ended up costing the government £350,000 and SEL also paid almost the same amount. And we didn’t even go to court.
‘If SEL is forced to challenge the price control order, it seems likely that the cost will be closer to £1m. this time.
‘Unfortunately, this is a lose/lose situation for our customers. SEL expects the commissioner to lose, so most of this will have to be paid by Chief Pleas, which means it will become a large part of your tax bill next year. This is something we desperately want to avoid.’
He said that there was a prospect of avoiding this cost.
‘Guernsey Electricity are heading up a process to value our company. It is very likely that this could lead to Guernsey Electricity becoming a Bailiwick-wide electricity company. If they decide to purchase the company and use their economy of scale, they should be able to meet the commissioner’s price or even get below it. This would make the entire £1m. cost unnecessary.
‘If Chief Pleas decide that they will purchase instead, they will want to honour their commissioner’s price, which would also make the £1m. a waste of money. In light of this, SEL has asked Chief Pleas to discuss this with the commissioner and to ask him to delay his price control order until Guernsey Electricity have had a chance to finish the valuation.
‘The law gives Chief Pleas the right to annul the commissioner’s order for type of this reason, so it is unlikely the commissioner would refuse if asked.
‘SEL wants to avoid increased costs for you, our customers and as Sark taxpayers. The only way we can do this is if we are given the time to pursue a solution that will be viable for the island both now and well into the future.’
The Sark Electricity User Group said that it was perfectly reasonable to set the price at 54p.
‘The determination process and price control order appear to us to have considered every cost component incurred in your [SEL] providing electricity for the island,’ it said.
‘You have failed to make it clear to us why you do not accept the content and conclusions of the determination and price control order, or on what grounds you feel justified in threatening your customers with the prospect of legal confrontation – perhaps you could tell us?’
The group cast doubt on how imminent a deal with Guernsey Electricity or Chief Pleas would be.
‘However, we see this as developing policy for the future of your business and not a reason to put off charging your customers a fair and reasonable price for their electricity supply.’