Guernsey Electricity seeks 9% price rise

GUERNSEY Electricity is to seek a 9% increase in its tariffs which, if approved, will come into effect from the beginning of July.

CEO of Guernsey Electricity Alan Bates said the utility’s contractual arrangements have protected it against the short term consequences of energy inflation. (Picture by Peter Frankland, 30807445)
CEO of Guernsey Electricity Alan Bates said the utility’s contractual arrangements have protected it against the short term consequences of energy inflation. (Picture by Peter Frankland, 30807445)

The States-owned utility has now completed a public consultation on its future pricing, which it launched in March, and it has concluded that a single 9% rise, accompanied by an additional £6m. of borrowing, is required.

Responsibility for setting tariffs was transferred to the States’ Trading Supervisory Board in February, and it will now consider any application from the company, which has to be submitted by 1 June.

News of the price hike proposal comes as inflation is rising rapidly, propelled partly by increases in fuel and transport, and electricity companies in Jersey and the Isle of Man are ramping up prices significantly.

Chief executive Alan Bates said the company’s contractual arrangements have protected it against the short term consequences of energy inflation, but Jersey has announced a 5% rise from July and another 5% in January. Guernsey plans not to react to market turbulence.

The increased tariff is instead being sought to enable significant new investment in infrastructure, primarily to ensure security of supply, but also to enable decarbonisation now required as a result of Guernsey signing up to the Paris Agreement.

‘We’ve not put our prices up to cover investment in the infrastructure,’ Mr Bates said, ‘and that’s what this year’s increases will be about. The energy transition is now happening. We’ve got to replace our plant and equipment. We’ve had no underlying increase in terms of those investments for over 10 years now.’

The island was partially protected from energy inflation by agreeing prices with French suppliers well in advance, known as ‘hedging’. Guernsey Electricity does this with Jersey through the Channel Island Electricity Grid with Europe. The current contract is with French company EDF and runs until 2027, though the European grid makes it feasible to purchase from suppliers in other countries and have it delivered via the cable from France via Jersey.

Mr Bates said he was very keen for the States to provide clear direction on how security of supply should be pursued – whether by establishing a second cable to Europe or by replacing the ageing power station’s facilities. Both options are expected to carry a price tag in the region of £80-90m.

He also anticipates greater clarity on decarbonisation from the forthcoming electricity strategy, which is due to be published late this year or early in 2023.

‘Do we want to go for lots of local renewables and do we incentivise that and is it small scale or is it big scale, as in offshore wind – that’s another decision from a supply perspective,’ he said.

‘The States have really got to step up and say actually we want to be very clear on the role of GEL and say this is what we want to achieve and I hope to then be able to deliver it.’

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