Electricity price hikes likely for carbon net-zero by 2050

Guernsey Electricity has said it will need to increase investment in its network to make this happen and has launched a consultation on proposed changes to its tariff structure.

The company said it needed to raise total income by 9% to pay for the work. In its most recent accounts, to September 2020, the company had revenues of £81m., creating a gross profit of nearly £11m., but overall an operating loss of nearly £8m.

Its proposals for increasing bills, which major on increasing the standing charge for customers, which funds the utility’s fixed costs, would see an increase for bills in year one, which the utility said would put £25-30 on islanders’ quarterly bills, or £40-50 a quarter if they use electricity for heating.

This initial rise would be followed by two more years of tariff increases, it has suggested. The rate of increase would depend on global costs and what progress the wider States has made on its electricity strategy.

Karl Brouard, chief financial officer at Guernsey Electricity, said the consultation formed part of explaining the challenges of delivering the energy transition, and determining how it will be funded.

‘We are committed to providing a secure, sustainable and reliable electricity service that is affordable and fair to all islanders, and want to be transparent around the tariff changes that are required,’ he said.

‘It is clear that we all need to work together to make decarbonisation in Guernsey sustainable for our community. Our customers’ opinions are very important and their views will help us have a greater understanding of future energy pricing requirements.’

The company is looking at how much investment is required to get to net-zero by 2050, which the States is committed to, having committed to sign up to the Paris Agreement, limiting global warming and tackling climate change.

To achieve this, greener electricity will have to become the dominant source for power, heating and road transport locally.

Guernsey Electricity would facilitate this through customers paying directly through tariffs, and indirectly by supporting GE taking on debt to pay for infrastructure.

The outcome of its survey, which is being done by UK-based independent market research agency Explain, will be submitted to the States’ Trading Supervisory Board over the summer.

‘Recent world events and the ongoing volatility in the energy markets have also highlighted the importance of a resilient energy system,’ Mr Brouard added.

‘We must increase our investment in electrical infrastructure and create a network that can cope with the increased electricity demand we are seeing, support an increase in local renewables and provide the infrastructure to achieve net-zero carbon targets.

‘Fortunately, the cost of electricity to the island is not experiencing a significant increase, such as that in the UK and Europe, but the infrastructure we need to meet today’s demand does require investment and tariffs must change to pay for this.’