But the increase will be less than the 14.25% Guernsey Electricity had requested.
The States’ Trading Supervisory Board has approved the 13% rise from 1 July, which will be split between the charge per unit and the daily fixed standing charge.
A review commissioned by STSB found that Guernsey’s current electricity tariffs were among the lowest in the British Isles.
STSB president Deputy Peter Roffey said the increase was regrettable, but unavoidable.
‘It is regrettable that Guernsey Electricity had to apply for such a significant increase in tariffs, but this is a nettle that had to be grasped,’ he said.
‘The dysfunctional regulatory regime that existed previously starved the company of the funding required to adequately invest in the network over the past decade, and unfortunately it is having to face up to that reality now, and play catch-up.’
The utility last raised prices in July, when bills went up by 9% to help fund existing infrastructure.
The extra revenue raised will be used to fund infrastructure investment and offset escalating electricity importation and generations costs.
In the past 12 months, those costs incurred by the company have increased by £3.3m. above what it had forecast in 2022.
Guernsey Electricity’s chief financial officer Karl Brouard said the standing charge for the average local consumer would increase from £30 to £49.50 per quarter.
For the average usage customer on the standard or economy tariffs, both without electric heating, the combined impact of these changes is a rise of around £200 per year per household.
‘We understand that this comes at a time when the cost of living is increasing for everyone, but we cannot delay much-needed investment and upgrading of the network, along with the requirement to maintain the security of electricity supply to the island,’ he said.
‘To ensure we meet the level of investment required, we will continue to finance this through additional debt as well as the increase in tariffs.’
In deciding on a lower increase than Guernsey Electricity had requested, STSB had considered the impact on consumers during the current economic climate, and the need for the company to continue focusing on improving productivity.
‘However a rise is unavoidable,’ Deputy Roffey said.
‘We recognise the timing is bad, but to put it off could simply store up even greater challenges in the years ahead. The STSB has therefore acted responsibly in approving an increase, although not to the level that Guernsey Electricity had requested, which will require the company to continue focusing on improving efficiency.’
The STSB commissioned an independent review of the company’s application and the financial models, and a separate tariff and efficiency benchmarking review.
These found that electricity bills locally were currently among the lowest in the British Isles, and Guernsey Electricity performed well compared to counterparts in Jersey and the Isle of Man.
To help islanders understand the increase, a tariff calculator will be launched on Guernsey Electricity’s website next month.