Sark Electricity Limited announced two significant price increases last week, taking the price for a unit of electricity from 49p per unit to almost £1.14. And it has emerged that islanders will have to pay it for probably the whole of this month.
The major part of the price rise was ‘legal levies’ of 40p and 20p per unit, the first to offset the company’s court costs in a fight against Chief Pleas’ compulsory purchase of the company, and the second for legal costs the company expected it would incur fighting the introduction of a new price control order that might remove the original 40p levy. The price increases came into effect on Monday.
In his preliminary conclusions price commissioner Shane Lynch described both legal levies as ‘very clearly neither fair nor reasonable.’
However, even with the preliminary conclusions ruling against SEL, it appears that Sarkees will have to pay the full asking price for September, as due to the statutory process, Mr Lynch said he did not have the legal power to make a price control order for this month.
‘It is likely to be October before I can introduce a new price control order to cap the price that SEL can charge,’ he said.
‘I appreciate that a 114% increase to the tariff, with only five days’ notice, is likely to cause severe financial hardship for many consumers in Sark.’
He added that many islanders would find it very difficult to pay this increased bill in September.
‘In light of my preliminary conclusions, consumers may wish to ask SEL not to include the levies in the September bills,’ he said. ‘If this is not accepted, consumers may wish to seek robust assurance from SEL that any funds collected are not used to pay for any historical legal bills which SEL has previously highlighted and sought to recover in electricity prices.’
He said he could not allow a levy to cover legal costs incurred by fighting a compulsory purchase and had made this clear in a published policy statement in November 2019.
‘I cannot allow this cost to be recovered in electricity prices because it is not a cost which must be incurred to generate and distribute electricity,’ he said.
He added that the further 20p levy which SEL added to recover costs incurred responding to his investigations could also not be allowed, despite it being a ‘reasonable cost’ that should be recoverable from electricity prices.
‘My office has previously determined that £20,000 per year (2025 prices) would be a reasonable amount [of legal costs which could be recovered through the tariff], and this has been built into the fixed cost allowance in previous price control orders which SEL has accepted. In 2025, £20,000 would amount to about 1.4p a unit.’
A private meeting for residents was held on the island on Sunday night to discuss their options, including whether to refuse to pay the levy, or to wait for a ruling from the commissioner.
One of the organisers, who wished to remain anonymous, said around 70 residents attended, but the discussions and outcomes from the meeting should remain private.
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