Déjà vu? Sark approaching another electricity stand off

Tuesday 01 October 2019

Sark Electricity could be making a 'reasonable return' with a price of 53p per unit, it has been suggested, despite the fact the company yesterday hiked its prices to the lofty heights of 85p per unit.

The island's Electricity Price Control Commissioner has released a report saying the company could easily be making money charging substantially less than it has been, not substantially more.

This has raised the question of why, over the weekend, SEL announced it would have to put its prices up drastically, making them the most expensive in the world. 

Sark residents had been paying 66p per unit previously, after this time last year, the owner of SEL threatened to leave the island without power. This was because David Gordon-Brown felt prices being enforced on him by the island's Commissioner would leave him operating in huge losses.

While crisis negotiations reached the very final hour, a deal ended up being struck which meant Mr Gordon-Brown could keep charging 66p, but would start the process of selling the company to Chief Pleas. That does not appear to have happened, however, and now, the island could find itself in a similar situation to 2018. 

There is an information update about Sark Electricity which is being delivered to every house & business in Sark later today. https://t.co/apfe3roPch

— Stocks Hotel Sark (@SarkHotel) October 1, 2019

Chief Pleas have already confirmed that contingencies are in place this time though, so if the power does go off, people will be ready. 

Pictured: David Gordon-Brown. 

Mr Gordon-Brown said he was putting the prices up this month to cover the ongoing legal costs the situation had left him in, but also said he wanted to have a public meeting in November to discuss the situation and to prevent another crisis occurring. 

Commissioner Dr Anthony White could intervene before then, however, as he has said an in-depth investigation he carried out suggests that SEL would be able to operate at a reasonable return even with a price of 53p per unit - if it were run reasonably and efficiently. 

"SEL has an unrealistic view of the level of returns it is fair to expect customers to bear, and it also assumes that all costs it incurs operating the business, whether they are reasonable or not, may be passed on to customers," Dr White said.

"This may be 'neither fair nor reasonable'." 

The Commissioner will now be seeking representations from SEL, residents and other parties to decide whether a formal determination on the fairness of the current prices. This could theoretically lead to a legally enforceable price control order, which in turn could put the island in the same situation as it was in last year, with the possibility of having the lights go out.

More to come...