Deputy wants islanders protected from waste and electricity price rises

Wednesday 01 June 2022

The Policy & Resources Committee is being urged to use the States' financial muscle to relieve islanders of inflation-busting increases in waste and electricity prices planned for this summer.

Deputy Gavin St Pier says the Committee "needs to step up and take the lead - and quickly" to prevent price rises by States-owned utilities from heaping further financial pressure on family budgets already hit by rising inflation and a growing cost of living crisis.

The States' Trading Supervisory Board announced last week that Guernsey Waste plans to increase its annual flat charge and black bag charges from 1 July. It expects the average household to pay around 8% more this year than last year.

Then the Board announced on Tuesday morning that it had approved an application from Guernsey Electricity to raise tariffs, also from 1 July. It provided examples of the effects on different customers which indicated that most households would see their electricity bills increase by between 8% and 11% in a year.

The most-recent quarterly figures showed that retail price inflation was nearly 6% in the 12-month period ending 31 March this year. This means inflation is at its highest rate since 2008 and it is projected to rise still further before the end of the year.

Pictured: Electricity consumers and users of waste services are facing inflation-busting price increases on top of the highest rate of inflation in Guernsey since 2008.

Deputy St Pier, a former President of the Policy & Resources Committee, is calling on his successors to take two specific actions which he said would protect islanders from unreasonable price rises while still providing Guernsey Waste and Guernsey Electricity with the additional income they need.

"Firstly, Policy & Resources should use the States' capital reserve to invest £10.7million as additional equity into Guernsey Electricity," Deputy St Pier, pictured top, told Express.

"This would ensure Guernsey Electricity has the capital it needs to invest in its network but would postpone for a year the price increase approved from 1July, after the current inflation is expected to have peaked.

"Secondly, Policy & Resources should undertake to use general revenue to underpin the increased deficit in Guernsey Waste if the waste charges do not increase on 1 July.

"It is already doing this anyway for most of the deficit on the waste account."

Pictured: Deputy Gavin St Pier believes that the President of the Policy & Resources Committee, Deputy Peter Ferbrache (left), the Committee's Treasury Lead, Deputy Mark Helyar, and their colleagues have the financial flexibility to protect islanders from higher electricity tariffs and waste charges until, as forecast, inflation begins to fall again next year. 

Deputy St Pier said he understood why the States' Trading Supervisory Board and the utilities it oversees need to increase income to meet running costs or invest in essential infrastructure improvements. But he also said that consumers must not face the full brunt of such increases at the present time.

"I have no criticism of Guernsey Electricity or the States' Trading Supervisory Board," he said. "Both are making rational and responsible decisions reflecting the market conditions in which their businesses are operating.

"The Board has promised a review of the system of waste charging but the States has not seen or approved this yet. I expect - and for good reason, based on recent experience - that the Board fears the States are incapable of making any decisions and so it needs to take some action now.  

"But these increases in waste and electricity prices by about 9%, falling on the same day of 1 July, are a double whammy for household budgets already reeling from rapidly rising food and other prices."

Pictured: Deputy Gavin St Pier is worried that increasing electricity tariffs and waste charges from 1 July will add fuel to the fire of inflation this summer.

Deputy St Pier said that the Policy & Resources Committee needs to act swiftly to put his two suggestions into practice and could do so without setting risky precedents for the future.  

"We are experiencing very unusual economic conditions: an inflation shock created by the supply chain disruptions of covid and the war in Ukraine," he said.

"Many of the pressures come from outside the island. Our energy market use means that so far we have been largely insulated from the most extreme impacts of what is happening elsewhere. 

"In these conditions, it is our government's job to take what action it can to mitigate or avoid adding local inflationary pressures and risk a local wage/price spiral. 

"The unique nature of this inflation spike means this action does not create any precedent."

Pictured: The members of the States' Trading Supervisory Board face different challenges at Guernsey Waste, where there is an operating deficit caused by the island's high recycling rates, and at Guernsey Electricity, where there is a pressing need for more revenue to fund essential infrastructure improvements.

The reasons for the proposed price rises are very different.

Guernsey Waste is trying to reduce the size of its annual trading deficit, which is largely due to lower levels of income caused by higher than anticipated rates of recycling across the island. The States’ Trading Supervisory Board is reviewing current charging arrangements and is expected to propose changes in a policy letter to the States' Assembly later this year.

Guernsey Electricity plans to increase essential investment in the island's electricity network, some of which it has said are long overdue.

When announcing that the States' Trading Supervisory Board had agreed to the company's application to increase tariffs, Deputy Peter Roffey, the President of the Board, told Express: "Without a sea change in the level of investment which Guernsey Electricity is putting into the island's electricity infrastructure, it is not too dramatic to say that in not too many years the lights could go out.

"That would be disastrous for Guernsey's economy and its reputation and we simply could not allow it to happen."

At the present time, the planned electricity price rises will not go to the States' Assembly. The planned increases in waste charges will go to the Assembly but only as a statutory instrument to be noted. However, the Assembly can annul statutory instruments and scrap their effects, and Deputy St Pier said that he and Deputy Lyndon Trott were "preparing a motion to annul the waste charges increase".

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