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50p price cap broken in Alderney - so new subsidy kicks in

50p price cap broken in Alderney - so new subsidy kicks in

Thursday 12 May 2022

50p price cap broken in Alderney - so new subsidy kicks in

Thursday 12 May 2022


The cost of the latest shipment of fuel into Alderney has pushed the standard retail price of electricity above the island's legal price cap.

The price paid by Alderney residents will remain under the legal cap but only because of a new relief scheme which customers will see for the first time on bills due at the end of this month.

Alderney Electricity announced yesterday that the cost of the latest shipment had forced it to increase the price of a unit of electricity on its standard A tariff above the 50p cap set by the States. 

Its new relief scheme - a subsidy of 4.35p per unit - will now be applied to keep the tariff under the 50p cap. The company and its largest shareholder, the States of Alderney, said the subsidy would "typically mean only a small rise of 50p on the average quarterly bill for islanders". 

Alderney Electricity is budgeting to spend around £250,000 a year on its new relief scheme. But the company and the States are making no guarantees on the scheme beyond the next shipment of fuel, which is due to arrive in the island late in August.

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Pictured: Alderney's new electricity subsidy is expected to cost £250,000 a year, but prices per unit are still around three times higher than in Guernsey.

"As anticipated, the cost of fuel received in the latest shipment has risen significantly as a result of recent world events and the volatility of the global fuels market. By the day of loading in mid- April, the refinery price of diesel and kerosene had risen approximately 45% above the price paid in February," said James Lancaster, Managing Director of Alderney Electricity.

"The first bills to receive the subsidy will be those due at the end of May 2022. The subsidy will be shown separately on bills so that consumers can see both the true price of electricity used and the value of the subsidy that they have received."

Bill Abel, who chairs the States' senior committee, Policy & Finance, said he was hopeful that the cost of the next shipment of fuel to the island would be lower than the latest shipment.

"I have discussed the matter with Alderney Electricity Ltd. and the company has confirmed that the subsidy can be maintained until the next fuel shipment is received in late August," said Mr Abel.

"We have also compared the price paid on the last shipment to the global price of crude oil and, on this basis, the price paid was higher than anticipated. It may be that this discrepancy results from a lag in the pricing mechanism. If this is the case, and if the price of crude oil remains stable as forecast, then there is some optimism that the price of diesel and kerosene may fall by the date of the next shipment."

Mr Abel said the company wanted to "maintain the subsidy for as long as possible" and pledged that the States would work with the company "to consider how to provide further support for those struggling to meet their energy costs should the need still be with us as we move into the winter".

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Pictured: Bill Abel, Chairman of the Policy & Finance Committee, assured islanders that the States and Alderney Electricity would continue to contain price rises as much as possible.

Express reported last month that cost of living pressures were the focus of questions at the latest meeting of the States of Alderney. 

Mr Abel said that energy costs were around three times higher in Alderney than in Guernsey.

States' member Alex Snowdon asked whether the States could provide additional relief for residents affected by significant increases in the price of essential commodities. He said "these are potentially exceptional times calling for exceptional measures".

Mr Snowdon told Express yesterday that Alderney Electricity should be commended for introducing its new subsidy but reiterated his view that the cost of living crisis in Alderney will get worse this year and that the States will need to do more to alleviate the effects of rising prices.

Alderney rep Alex Snowdon

Pictured: Alderney States' member Alex Snowdon wants the island's government to do more to alleviate the cost of living crisis in Alderney.

"As global price challenges start to hit the island with the cost of living crisis, the subsidy from Alderney Electricity is welcome news during this difficult period," said Mr Snowdon.

"There will be hard times ahead with people sadly struggling to keep up with bills and everyday costs. However, the actions from Alderney Electricity have demonstrated its commitment to try and support the island as higher costs impact islanders.

"The island's electricity price cap is set by Ordinance under the Electricity Concession (Amendment) (Alderney) Law 1978. This was last amended and increased by Ordinance in 2008, setting the maximum price of electricity at 50p per unit. Any further increases will require approval from the States of Alderney.

"The cost of living crisis will need to be monitored closely. Another area of concern is high food costs being 18% more expensive than Guernsey. The States of Alderney will likely need to explore ways of helping as the situation worsens considerably as the year continues."

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Picture: States' member Alex Snowdon said that difficulties caused by rising fossil fuel costs should accelerate Alderney's efforts to obtain more energy from renewable sources.

Mr Snowdon also said the latest pressure on fuel prices underlined the need for cleaner and more sustainable forms of energy in Alderney.

"There is a clear need for Alderney to move towards renewable energy as the price of oil is likely to remain high and potentially keep increasing," he said.

"We need to start to deliver on our promise to implement renewable energy for the island's power requirements.

"Green and clean energy needs to be delivered soon by the States of Alderney and Alderney Electricity in my opinion."

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