GE requested 14.25% tariff increase ‘just to stand still’
GUERNSEY Electricity’s request for a 14.25% rise in tariffs was made in an effort to avoid the company having to take on more debt ‘just to stand still’, said CEO Alan Bates.
While this was what the company wanted, the States' Trading Supervisory Board approved a lower increase of 13%, which will come into effect from July.
Mr Bates said that GE had hoped that the full amount would be approved to allow it to avoid taking on additional debt.
‘At some point we need to get back to sustainable financing where we don’t keep borrowing just to stand still.’
As a result of the STSB’s decision, it was going to have to borrow.
‘But just to do status quo replacements when you’re just replacing what’s there already shouldn’t be done by debt.
‘Now we won’t reach that sort of sustainable model as quickly as we wanted.’
He said that the company wanted to stop borrowing for its baseline investment model and build up some financial headroom to allow it to invest in such things as a new power station at some point, or to improve connections with France, or other projects which might emerge from the new States electricity strategy, which is due for publication next month.
About half of the income is going to go on capital investment, while the other half would be used to cover ‘inflationary pressures’ and changes to the wholesale market.
There were signs that the wholesale market was easing, Mr Bates said, but it was still nowhere near what it was before the Ukraine war and this would have an impact on future tariffs.
‘We are going to try and make sure that we minimise that impact as much as possible,’ said Mr Bates.
He did not anticipate the need for a further increase before the annual one next summer, and said he was unable to say how much that might be.
‘The two things that we’re not sure about is the speed of implementation of the electricity strategy – that can have an impact on tariffs – and where the wholesale market is going.’
The change will see the standing charge for the average local consumer 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.
n To help islanders understand the increase, a tariff calculator will be launched on Guernsey Electricity’s website next month.
