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Electricity prices are set to rise in Sark once again after it was discovered that miscalculations made by the previous owner of the island's only electricity supplier had led to an "over-statement" of actual consumption levels.
Electricity Prices Control Commissioner Anthony White has proposed increasing the maximum price SEL can charge for electricity from 54p/kWh to 58 p/kWh for the next 12 months to allow the firm to recover £65,000.
Earlier this year, it emerged that the consumption figures provided to Mr White by Sark Electricity’s previous owner, the late David Gordon-Brown, were "seriously in error".
The consumption for 2018 was "significantly overstated" and the electricity consumed by the auxiliary power station plant had been erroneously included in the sales since midway through 2017, leading to consumption levels that are 5% lower than previously thought.
SEL Owner Alan Jackson believes, on account of these errors and the impact of the corona virus on economic activity, that the amount of electricity sold is likely to be between 1,261,000 and 1,298,000 kWh, well below the 1,500,000 kWh estimate in the PCO.
Pictured: Sark Electricity’s estimates of annual consumption (in kWh) compared against the Electricity Price Commissioner’s forecasts.
Mr White said: "Electricity consumption in Sark has been considerably lower than anticipated for the purposes of the Price Control Order that I made in December 2019 in my capacity as Commissioner."
"This is as a result of the lower level of economic activity caused by the corona virus pandemic but compounded by the substantial errors discovered by Mr Alan Jackson in the historic consumption data provided by SEL to my office last year.
"In addition, I am aware that SEL might invest in a capital replacement programme necessary as a result of the continuing degradation of SEL’s equipment and to maintain supplies to a specific group of residential properties located in the north eastern area of Sark."
In light of this, Mr White has proposed increasing the 54p unit price to around 58 p/kWh for 12 months.
Pictured: The Price Commissioner’s assessment of SEL’s costs in 2020. The fixed cash costs have been increased by Guernsey inflation of 2.4%, while the depreciation charge has been calculated from an existing asset value assessment updated to 2020.
"I believe that this would allow SEL to earn a reasonable return, given annual consumption levels in Sark of 1,140,000 kWh and a diesel fuel price of 30.3 p/litre at Guernsey," said Mr White.
"The price of 58 p/kWh includes an allowance of around 6 p/kWh to allow SEL to recover its shortfall in revenues caused by the consumption and fuel cost assumptions differing from those I assumed in the PCO. The price the following year will be around 52 p/kWh."
People in Sark have until 30 October 2020 to make representations on the proposed changes. These should be sent by email to commissioner@epc.sark.gg or by post to:
Office of the Sark Electricity Price Control Commissioner
The Old Vicarage
West Street
Long Buckby
Northamptonshire
NN6 7QF
England
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