14.25% electricity price hike proposed

Tuesday 21 February 2023

Electricity prices will rise by an average 14.25% later this year if proposals are accepted.

The hike comes on the back of a 9% rise in July, while there was an expectation at the time that further increases would be kept below that level.

Guernsey Electricity is consulting its customers on the tariff change.

“Although local customers have been relatively insulated from the types of rises seen in the UK as a result of our forward price setting strategy, we are not immune from the wider geopolitical impact,” said the company’s Chief Financial Officer Karl Brouard.

“Coupled with inflation hitting the highest rate for 30 years, this means we are facing increases in the cost of imported energy together with a rise in the cost of on-Island generation at the power station.”

The proposed 14.25% increase is an average, so the actual rate rise to vary across different individual tariffs and standing charges.

For the average domestic customer’s electricity use without electric heating, the overall increase will be between £47 to £49 per quarter.

Including electric heating, the overall increase will be between £76 to £86 per quarter.  

Since the Russian invasion of Ukraine in February last year, wholesale energy markets have experienced unprecedented volatility. 

Normally, more than 93% of the island’s energy is imported through a subsea cable that links us to France through Jersey. 

Guernsey Electricity anticipates total import prices for the current and next financial year will be higher than previous forecasts and will also increase significantly in the future as existing forward price setting arrangements expire.

The company also needs to upgrade its network and infrastructure over the coming years and maintain old power station equipment to ensure it can continue to act as a back-up.

It is proposing using a combination of tariffs and borrowing to fund this work.

“We realise that this comes at a time when the cost of living for everyone is increasing, but we cannot let these changes delay the planned investment in the network and the need to maintain the security of electricity supply to the Island. We must continue to power businesses, keep the Wi-Fi on and our homes warm today and just as importantly, into the future.

“Guernsey Electricity is committed to providing a secure, sustainable and reliable electricity supply that is both affordable and fair to all Islanders and we want to be transparent around the tariff changes that are required.

“We must start to boost our investment and create a network that can cope with the rising electricity demand we are seeing, support an increase in local renewables and provide the infrastructure to achieve net zero carbon targets set by the States.”

Guernsey Electricity has already started restructuring its tariffs so that a higher proportion of a customer's bill comes from the standing charge rather than the unit charge.

This helps ensure that as more people switch to renewables, the company is overly reliant on unit sales to meet the cost of maintaining the network.

It is proposing this year that the for the average domestic customer, the standing charge will increase from £30 to £49.50 per quarter.

The consultation, available here, ends on Tuesday 7 March.

Paper copies are available from the reception in the retail showroom at Electricity House.

The results will be used to inform the final tariff application made to the States Trading Supervisory Board, which has the responsibility to assess and approve electricity tariffs.

Picture (top): Credit - Paul Chambers.