GEL’s owner can’t be its regulator too

PROPOSALS to be discussed by the States next week will, if approved, free Guernsey Electricity from independent regulation and instead leave that job to the States’ Trading Supervisory Board – effectively its owner.

For a monopoly supplier, the move makes perfect sense. Likewise for the STSB. No shareholder likes to see its asset losing money, so what better way of avoiding that than by dictating your own prices?

The reality may be more complicated, but consumers are unlikely to see it that way. Guernsey electricity is already expensive – 19.78p a unit compared to Jersey’s 15.68p – and that’s with an expert and independent regulator scrutinising rises.

Whatever STSB’s abilities, it does not have the forensic skills to challenge Guernsey Electricity in the way that the Guernsey Competition and Regulatory Authority does, and perhaps that’s why GEL now wants its owner effectively to start marking its homework.

For the Little Green Energy Company, this is more than an academic argument. It could undermine its business model and kill it off at outset.

Islanders should care about that too. Its approach is to install solar panels at customers’ properties at its expense – no heavy up front costs or payback anxieties for them – on the basis the electricity generated is bought back from it.

Therein the catch. Green, sustainable energy with no capital outlay for the user and power costs competitive with those currently charged by Guernsey Electricity. Freed from regulation, however, GEL plans to change that by imposing a massive fixed charge and slashing electricity costs. No benefit for consumers, bills whether you use electricity or not and an end to competition.

GEL and STSB can argue it differently, of course, but then neither can claim to be neutral or impartial or a champion of consumer rights.

In addition, the States has a policy of encouraging competition – what would broadband speeds and prices be like without it? – so this proposal appears counter-intuitive on many levels.

For that reason alone, adjudicating on fair electricity prices and ruling on the business model of alternative suppliers should be left to the proper competition watchdog.

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