‘No need’ to let States set prices
A FURTHER twist over controversial plans to transfer responsibility for setting electricity prices from an independent regulator to the States emerged over the weekend after it was stated that the reasoning behind the change was defective.
Guernsey Competition and Regulatory Authority chief executive Michael Byrne said Guernsey Electricity as a government-owned monopoly was commercialised in 2002 on the basis it would be independently scrutinised.
‘Key facts on which the [deregulation] proposal is based are, however, inaccurate, in particular the basis for the policy proposal is to allow GEL flexibility to restructure and reconfigure its tariffs,’ he said .
The States is being asked to agree that the GCRA’s current responsibilities for determining tariffs and prices charged by GEL for the supply of electricity should be transferred to the States Trading Supervisory Board, which acts as shareholder of the utility.
However, Mr Byrne said: ‘GEL has in fact had the ability to restructure and reconfigure its tariffs for almost a decade and is not currently prevented from doing so under its regulatory price control.’
His comments raise questions about the underlying reason for the proposed change and will reinforce concerns raised last week by the Little Green Energy Company that the real purpose of the move is to protect GEL from competition.
The green energy company wants to install solar panels on islanders’ properties at its expense and charge them for using the power produced. It says deregulation would stop this from happening and secure GEL’s monopoly position for the future.
Approached for comment, Mr Byrne said an earlier States-appointed review of Guernsey’s regulatory utility regime reinforced the value of independent oversight of Guernsey Electricity.
It found: ‘On competition, we conclude (contrary to the view put to us by some parties) that the scope for competition on the island – and in the regulated sectors, including electricity – is greater than is generally assumed.
‘While Guernsey’s size means the intensity of competition may not be as vigorous as in larger economies, the possibility of challenge through competitive entry can still be a powerful inducement to better performance in many sectors and industries (including the regulated sectors).’
Mr Byrne added: ‘The [GCRA] agrees with this view and maintains that the most appropriate means by which consumers and competition are protected in a monopoly context is through independent regulatory oversight of the prices charged by a monopoly, which was the basis on which GEL was originally commercialised.’
Guernsey Electricity has earlier stated that it wants to adjust its tariffs to reduce inequality created by some members of the community installing expensive renewable energy sources while remaining attached to the network grid.
