Electricity prices will go up 9.8% from 1 April in Alderney.
Alderney Electricity Limited said the price needs to go up after being held below inflation for too long, which has protected customers from interim shocks when global prices have increased such as when Russia invaded Ukraine in 2022.
Managing Director Chris MacGregor said the decision to increase tariffs now followed a review of the Company’s finances earlier this year, which showed that holding electricity prices had protected customers but meant income was insufficient to cover the long-term cost of operating Alderney’s electricity system.
The increase represents a 6.4% above inflation (3.4%) tariff increase.
“For many years AEL deliberately held electricity prices below inflation to help protect households and businesses from wider economic pressures,” said Mr MacGregor.
“That approach helped the community through difficult periods, including covid and the global energy shock following the invasion of Ukraine, but it has also created a growing gap between the cost of running Alderney’s energy systems and the revenue needed to sustain them.”
The 9.8% increase coming in on 1 April will begin correcting that long-term imbalance, he said, while enabling the company to continue working on the planned integration of renewables.
Mr MacGregor said the price rise has deliberately been held below 10% – with a 3.4% rate of inflation and a 6.4% tariff increase – but it will help ensure the long-term stability of Alderney’s electricity system.
“If we had increased prices to accurately reflect inflation, customers would be paying between 11-18% more than they are now,” he explained. “Even with April’s increase, the typical electricity unit price will be lower than this.”
The price rise means that a household on Tariff C, using around 600 units of electricity per quarter, the cost will go up by around £20 per quarter or around £1.50 per week.
A household on Tariff C, with a 6-room assessment, will likely see an increase of around £40 per quarter, or just over £3 per week.
Mr MacGregor said even after the price increase comes in next month, electricity prices in Alderney will remain below the level they would have reached if tariffs had simply kept pace with inflation over recent years.
“Any upward movement in energy prices is unwelcome and will affect all our community” he acknowledged.
Mr MacGregor said the decision to put prices up was agreed in February and will come in on 1 April, to coincide with longer days and warmer weather so customers will not be as reliant on heating their homes or using lights.
He said the price adjustment is necessary to ensure a safe, reliable and sustainable electricity network, and a financially sound company capable of investing in the island’s future resilience.
“It is my duty to act now to reduce vulnerability to future shocks, not to defer the problem to a later date.”