Guernsey Electricity has agreed a new multi-million pound credit facility with RBS International, so it can continue to invest in the island’s electricity infrastructure.
The utility’s strategic plan outlines how the island intends to meet the anticipated rise in electricity demand through to 2050 and this includes providing low carbon energy to power homes and businesses, and maintaining the grid.
GEL and RBSI have agreed that continued investment is critical to ensuring that can happen, with the bank agreeing the ongoing credit facility to allow GEL to do this.
Alan Bates, Chief Executive Officer, Guernsey Electricity, said he was pleased with the package RBSI offered.
“We are delighted to secure this funding package from RBS International who we found pragmatic and easy to deal with through the entire funding process,” he said.
GEL had asked the States to increase its tariffs by 9% earlier this year with a view to investing some of that money on the island’s electricity infrastructure.
STSB – which oversees the States’ shareholding in GEL – said the utility could only put tariffs up by 8%. It also told GEL that it should not be borrowing money to maintain our existing infrastructure but that it “should be moving to a position where further borrowing is only contemplated for capital investment to support the growth of the business, in accordance with the Electricity Strategy”.
The new credit facility with RBSI is related to that long term investment need, said Lynn Whitworth, the Head of Corporate and Commercial Banking in Guernsey.
“We’re proud to support Guernsey Electricity with this facility, which will help strengthen the island’s energy infrastructure for the long term.
“As demand for electricity grows, it’s vital that the electricity system remains resilient and future-ready—and we’re pleased to play a part in enabling that progress.”
RBSI has described the arrangement as being “a new multi-million pound revolving credit facility, reinforcing its position as one of the utility’s key lenders”.
A Guernsey Electricity spokesperson clarified that this money will be invested in the infrastructure it manages across the island.
They also acknowledged that the burden of paying back any money borrowed will fall on to customers.
However, the credit facility is essential to keep everything switched on now and over the coming years they said.
“To minimise the burden of this year’s tariff increase on customers as much as possible, we sought to achieve an appropriate balance to fund essential investment through a mix of additional debt financing and tariff increases.
“By agreeing this credit facility with RBSI we are able to make additional investment in our electricity infrastructure and progress several projects which will benefit the island.
“These include undertaking essential maintenance to our generation fleet at the Vale power station, a contribution towards the future replacement of Channel Islands Electricity Grid assets that provide Guernsey with low-carbon electricity imported from the European grid, and beginning the roll out of next generation electricity meters to improve our customers’ experience.
“However, we remain mindful that continuing to fund these investments by additional debt, rather than fully through earnings, has the effect of burdening future electricity customers with today’s costs.”