No plans to reverse 'temporary' Jersey Gas price hike

Monday 30 November 2020

There are no plans to reverse the 6.5% price hike introduced by Jersey Gas in May, which was initially billed as being temporary, and sparked a row with the Government over access to financial support.

David Cruddace, the Chief Executive Officer of Islands Energy Group - the company which owns Manx Gas, Guernsey Gas and Jersey Gas – said the volumes seen this year were 16% down compared to 2019.

The utility company said earlier this year that it had “no choice” but to increase prices from 1 May claiming it had been refused access to the Government’s co-funded payroll scheme.

Pictured: The Government said it hadn't refused support to the utility company.

The Government hit back at the suggestion they had refused support, saying Jersey Gas had “chosen” not to provide “vital financial information” on their business and their parent company despite several requests to do so.

“Jersey Gas is owned by Isle of Man based International Energy Group, which is in turn owned by a private equity fund,” the Government said in a statement.

“Before committing taxpayer support, the Government needs to understand what investor or lender support has already been sought by IEG and its owners, and why Jersey Gas does not have access to sufficient working capital of its own. This information has also not been received from Jersey Gas.” 

The utility company then retorted they had given the Government, “...the same detailed financial information, including all historic financial information and forward-looking forecasts” that was required of any business looking for access to the payroll co-funding scheme. 

It argued it was only asking for short-term funding in the form of the local payroll co-funding scheme in order, “...to stabilise the company during this challenging time and to contribute towards the continuation of a safe and secure supply of gas to homes and businesses across the Island throughout the pandemic and once it is over,” and not long-term support. 

Pictured: The States Assembly voted against giving financial support to Jersey Gas.

The matter came before the States Assembly following a proposition rom Deputy Geoff Southern that aimed to protect the jobs of the the privately-owned utility company's skilled workers.

It was defeated with only six States Members voting in favour of it, prompting then-Managing Director Ian Plenderleith to say the tariff increase had been implemented with “considerable regret."

Seven months later, there is no sign of the “temporary” being reversed. In a statement sent to Express, Mr Cruddace said covid-19 continued to impact the company with volumes down 16% on the previous year and showed “little sign of improving” with November down by 25%.

“I would like to be able to give an upbeat message but unfortunately I can’t,” he said.

“The reality is that the impacts of the pandemic continue as is evidenced by recent events on the island, with infections starting to increase and talk of further restrictions."

Mr Cruddace said the company continues to do “all we can to mitigate costs and keep our high service levels”. He also said that employees were still on a reduced pay. 

“Unfortunately, under the current circumstances the price increase will have to remain in place to protect the fabric of the business,” Mr Cruddace added. “Whilst this is not what you want to hear I hope you understand the situation."

Pictured: Some islanders are having to go without heating the Jersey Consumer Council said.

The Jersey Consumer Council voiced concerns about the increase and the impact it is having on islanders in its latest newsletter.

Urging the Government to find a solution, they said: “We already know of some islanders who are having to make very difficult choices this year, working out what they will have to do without. Sadly, for some, it is heating their home.”

Express has contacted the Government about whether discussions continue with Jersey Gas and is awaiting a reply.

Senator Lyndon Farnham warned in May he would consider “all steps available to Government” to ensure the utility company acts appropriately towards all of its stakeholders, saying he was not prepared to see islanders “suffer added hardship during this difficult time."

Under the Jersey Gas Company (Jersey) Law 1989, the government can force price changes on Jersey Gas if deemed necessary. It can also take shares in the company or take it over entirely with 12 months' notice.