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Guernsey Electricity appeals against regulatory breach in Court

Guernsey Electricity appeals against regulatory breach in Court

Tuesday 23 March 2021

Guernsey Electricity appeals against regulatory breach in Court


Guernsey Electricity and the Regulatory Authority went head-to-head again in the Appeals Court yesterday, as the two sides argued over GEL’s use of confidential agreements for some commercial customers.

Everyone in Guernsey uses electricity. Most people are on a tariff – more than 99.9% of us, the Court heard. However, some major commercial consumers have negotiated separate confidential agreements. The non-disclosure of these prices is the reason that GEL was found to be in breach of its licence by the Guernsey Competition & Regulatory Authority in October 2020.

The two parties set out their cases in lengthy detail: Advocate Mark Dunster for Guernsey Electricity Ltd argued that publishing the pricing strategy of its Section 16 agreements would reveal commercially sensitive and confidential information; Advocate Mark Ferbrache for the GCRA argued that regulation was impossible without pricing transparency. 

Advocate Dunster indicated that the legislation may oblige GEL to indicate its intention to charge new prices for a new customer, but it was not obliged to detail what those prices are. He added that a Section 16 agreement was a commercial negotiation, in which many commercial factors may come into play. 

“There are legion commercial considerations. There is no point putting just a price, because to be able to compare one contract with another, one must be able to take into account all sorts of variables. So, either none are published, or all are published, and that could include all sorts of commercial and confidential information,” he said. 

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Pictured: Advocate Mark Dunster, who argued that publication of Section 16 agreements would breach commercial confidentiality.

“Is it proportionate to say to a Section 16 customer that we are going to enter into an agreement with you, but we are going to publish the details to everyone, including to your competitors?” he asked. 

We, the company, find it hard to believe that any publication can take place.” 

Countering, Advocate Ferbrache said: “A Section 16 agreement is governed by the contracted terms of that section, and it takes regulation away from the regulator.” 

He said that GEL is a supplier of electricity and is subject to a licence and therefore subject to conditions of that licence. 

“There is no dispute that the publication of prices has not taken place. Guernsey Electricity have said that they shouldn’t have to as it often contains commercially sensitive information, but they were obliged to publish prices,” he said. 

Advocate Ferbrache pointed out that the Regulation of Utilities Law 2001 sets out the general duties of the regulator “to protect the interest of consumers”. 

“In order to exercise our regulatory function, we need to know all the information relating to pricing. If prices aren't published, how does a consumer know whether to raise a challenge with the authority on the terms of the agreement? 

He said that if the regulator did not know the terms of an agreement, how could it form a view whether certain criteria were being complied with? 

All that is required under Section 16 agreement is an agreement between the licence holder and the customer, without reference to the regulator. If you can’t have sight of a Section 16 agreement, it’s absolutely impossible to regulate it,” he said. 

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Pictured: The GCRA argued that regulation of electricity supply and pricing was impossible without complete transparency.

The original decision against GEL stemmed from a complaint by Guernsey Gas of anti-competitive behaviour. GEL won a tender process for power supply without having published its prices. A complaint by Guernsey Gas to the GCRA about this tender process expanded into a regulatory issue. 

The Bailiff, Richard McMahon, noted that the folders of legal documentation – somewhere in the region of 1,000 pages – were “a lot of paper for a narrow issue.” He also noted that nowhere in those pages had he seen details of any prices. 

At one point, the Bailiff expressed concern at the information he had been supplied for this appeals process. 

“What ought to be before the court is everything that was considered by the decision-maker. If it isn’t, how can I know, with respect to procedural irregularity and proportionality, whether that is correct and proportional?” 

He also questioned why part of the argument being placed before him wasin the form of an affidavit and not in person. 

The Bailiff reserved his judgment and has adjourned before delivering a verdict at a later date. 

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