Guernsey Electricity Limited (GEL) absolutely understands the strength of feeling amongst some islanders following the recent announcement of an increase in electricity tariffs, and we appreciate that this will have an impact on customers that are already struggling with the cost of living.

We respect our customers’ right to raise their concerns and our dedicated Customer Service team remain available for people to get in touch. We also share information on our website about our tariffs, the reasons for recent increases, how we spend revenue and ways which consumers can save money on their bills.

We are aware of the protest that has been proposed for the 14 June and respect the right of individuals to attend that event.

The company has worked hard to keep this year’s electricity tariff increase as low as possible, balancing this with the need to invest the appropriate amount in our electricity infrastructure to maintain a secure supply to our customers with minimal interruptions, against a backdrop where the company was unable to raise tariffs for a decade.

To minimise the burden on customers as much as possible, we have, again, sought to achieve an appropriate balance to fund this essential investment through a mix of additional debt financing and tariff increases. However, this additional debt and continued high interest rates means that we also face increased borrowing costs.

The current level of debt is £50m which requires £4m a year to service this borrowing. This debt is set to increase further as we look to absorb some of the burden of the increasing cost of running the business. We do, however, 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.

The States’ Trading Supervisory Board’s Decision Notice (available online) sets out the reasons and need for the changes to our charges that are being introduced from the 01 July.

It also makes clear that GEL has reduced the cost that would otherwise have arisen to customers through taking on additional borrowing and via the delivery of a further efficiency target of £1.8m.

The historical supply contracts which have shielded the island from the large increases seen in the UK and Europe post Ukraine are coming to a close, so prices unfortunately will inevitably need to rise from this base to more accurately reflect prevailing wholesale market prices which remain higher than pre the Ukraine conflict.

The approved tariff changes are on the basis of an 8% revenue cap. This approach enables individual tariffs and fixed standing charges to be varied by different amounts so long as the overall increase in electricity sales revenue does not exceed 8%.

The fixed costs of the business are approximately 50% of total costs and cover the maintenance and replacement of existing generation and network costs. The fixed standing charge currently only recovers 12.5% of these costs and so the remainder are recovered through the variable unit charge. This cross subsidy is not sustainable and GEL has been on a pathway to increasing the proportion of revenue recovered through fixed standing charges over recent tariff increases.

This latest increase in standing charges of 27% is designed to increase the proportion to 15% of revenue. The higher increase on standing charges means that lower increases are applied to some unit rates, for example the Standard unit rate will increase by 3.7% and Super Economy 12 normal rate will increase by 4.5%. In combination, the total impact on a Super Economy 12 customer with Super Heat electric heating will be approximately £57 per quarter.

Noting the concerns around fixed charges, GEL would like to make clear that there are longer term plans in place to support how we can reform such charges to our customers particularly those who place a lower strain on the island’s electricity network. This work will require investment in a domestic metering system which can account for the relative strain a customer might place on the network and why such a change cannot be introduced immediately.

In addition, a full review of tariff cost reflectivity will also be undertaken to identify how costs are incurred and how they can be more fairly recovered through individual tariffs. Until this work is complete, there will be no further increases to the standing charge above 15% of electricity sales revenue.

We continue to work closely with local charitable and volunteer organisations and consulted them directly on the reasons behind this year’s tariff application, as we have for the previous 3 years. Where a customer is concerned about their electricity bills, we work collaboratively with a range of organisations to support customers with payment plans, guidance on electricity efficiency, and to improve our help and guidance offering.

The company would ask that staff members are treated with respect on the day of the planned protest, as the power station site will be operational and our teams will need to deliver their work for the Island in the normal manner.”

A Guernsey Electricity spokesperson