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Consumers face inflation-busting hikes in electricity prices from this summer.
The States' Trading Supervisory Board announced this morning that it has approved an application from Guernsey Electricity to raise tariffs from 1 July to increase the company's revenue by 9%.
It said the additional revenue is necessary to invest at least £10.7million a year in the island's electricity infrastructure between now and 2025. Some improvements to the supply network are said to be long overdue.
Pictured: Imminent increases in the price of electricity will fuel further concerns about the cost of living with inflation in Guernsey already at its highest since 2008 and predicted to climb higher in the second half of the year.
The increase in prices will be split between the charge per unit and the fixed standing charge per customer. This means the difference in customers' bills will depend on how much electricity they use.
Announcing approval of the proposed increases, the States gave examples of the effect on various customers.
One example customer - on Super Economy 12 without electric heating who consumes 6,400 units per year - will see their annual bill go up by £117 or 10.8%.
A second example customer - with a Super Economy 12 meter and electric heating who consumes 14,400 units per year - will pay an additional £163 a year or 8.8%.
Pictured: The States published this table with examples of how different types of consumer would see their electricity prices change with effect from 1 July.
On 21 February, the States reclaimed responsibility for regulating electricity prices after taking the role away from the Guernsey Competition and Regulatory Authority and handing it to a States' committee - the States' Trading Supervisory Board, which also acts as sole shareholder in Guernsey Electricity.
At the time, the President of the Board, Deputy Peter Roffey, told Express that he anticipated Guernsey Electricity making an imminent approach for permission to change prices and tariffs. He said they had changed little for many years and left the company unable to make adequate investment in essential infrastructure.
This morning, in its decision notice on Guernsey Electricity's application for price rises, the Board said: "Current levels of investment in the island’s electricity infrastructure fall well below the level needed to maintain the existing asset base and are significantly below the level required to deliver the energy transition.
"Whilst highly conscious of the impact of increased charges on consumers at any time, but in particular during the current economic situation, the Board has nevertheless determined that the most important factor to be addressed in determining the application is the pressing need to start correcting current levels of under-investment in the electricity network.
"Such investment is needed to maintain and upgrade the network as an essential part of the island’s social and economic infrastructure and is required to support the anticipated growth in electricity demand as part of the energy transition anticipated by the [States'] energy policy."
Pictured: Proposals to change electricity tariffs now have to be agreed by the members of the States' Trading Supervisory Board: Deputy Charles Parkinson (left), Deputy Peter Roffey (centre), the President of the Board, and Deputy Nick Moakes (right).
Even taking the 1 July increases into account, the Board said that electricity prices would have increased by less than inflation since the last general change to tariffs in 2012.
The Board said that it arranged an independent review of Guernsey Electricity's application for increases before approving them. It also said it commissioned a separate independent review of the company's investment programme and considered the results of a public consultation carried out by the company earlier this year.
"Under the Board's zero dividend policy for Guernsey Electricity, all profits generated by the company will be reinvested in the best long-term interest of islanders," said the Board.
Pictured: Guernsey Electricity and the States' Trading Supervisory Board say that prices have remained too low for too long, resulting in a backlog of much-needed investment in electricity infrastructure.
The transfer of responsibility for electricity prices back to the States after two decades with an independent regulator was fiercely contested.
At the time, the Guernsey Competition and Regulatory Authority disputed the need for the change.
"Guernsey Electricity is a monopoly and was commercialised on the basis that it would be independently regulated," said the former regulator.
"Key facts on which the proposal is based are inaccurate. In particular, the basis for the policy proposal is to allow Guernsey Electricity flexibility to restructure and reconfigure its tariffs. Guernsey Electricity has, in fact, had the ability to do so for almost a decade and is not currently prevented from doing so under its regulatory price control."
But Guernsey Electricity and its successive political 'bosses' - Board Presidents Deputies Peter Ferbrache and Peter Roffey - claimed that the approach taken by the former regulator had done more harm than good.
“The Guernsey Competition and Regulatory Authority, with considerable respect, was not up to the mark,” said Deputy Ferbrache of his experience with the regulator while President of the Board. "The GCRA hasn’t done its job and wants £180,000 per annum for not doing its job."
Deputy Roffey said the former regulator had also allowed "market distortion" to "throw up ludicrous situations".
The full decision notice regarding the 1 July price increases can be read by clicking HERE.
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