Electric bills up 17%
Saturday 24th January 2009, 9:30AM GMT.
THE price of electricity will rise by 17% from April, with more hikes looking likely in the future.
The average household faces spending £106 more a year on electricity, despite the price of oil recently falling back sharply.
The Office of Utility Regulation last set the price in 2007 and the latest increase makes up for the £2.5m. lost by Guernsey Electricity in the intervening period as energy markets soared.
‘Guernsey Electricity has not been insulated from the sharp increases in global energy costs over the past two years,’ said managing director Ian Watson (pictured).
‘To put that into context, when the current price control began in April 2007 oil stood at around US$60 a barrel and at the time that was generally thought to be quite high. Since then, our prices have remained the same but oil has gone as high as US$150 a barrel. Until now, we have had to absorb all these additional costs and as a result incurred significant operating losses in the past two years. That situation is clearly not sustainable in the long term.’
The island has a cable link to the French grid, which has nuclear plants and other sources of generation, but increases in the price of oil push up prices no matter what method is used.
Although oil prices have fallen sharply recently, the rise in local electricity costs reflects past increases.
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and to think we could have had a waste to energy plant running by now….thanks deputy ogier
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this increase is a disgrace when the island is falling into a deep recession.what will the elderly do next winter when it comes to a choice of heat or eat.the our should be ashamed of themselves
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Leigh, you’re very welcome to dig deep into your own pockets to pay the £60m for a waste energy plant. Most experts will tell you in no uncertain terms the figures don’t stack up not least because the huge capital costs far outweigh any puny energy returned.
If Gsy Electricity are putting prices up 17% because oil spiked from $60 to $145 how much will we save next year now oil is below $50 a barrel and likely to stay around the $20-$45 for the next year?
I make it a 36% price drop is on the way next year.
So pleased those useless pen pushing beaurcrats at OUR will be announcing price cuts soon. It would be a first in 8yrs of doing jack!
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A big price hike in a public utility is usually a portent of privatisation.
Anyway I thought that the largest slice of our electrical energy was derived via the nuclear reactor at Cap de la Hague, not oil based genertion.
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Lucky you don’t live on the ‘Bean Rock’ – ours has just gone up 24%.
Ain’t life fun!
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Despite the reasons given for the increase I feel that a jump of 17% at one go, especially at this time, must cause hardship. Would it not be possible to attempt to average out so that increases are smaller if inevitably oftener ?
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It is much too high a price rise. The cost of oil has plummeted and yet now Guernsey Electricity (which is a public utility which is allowed to function commercially) is trying to claw back money.
I hope that the regulators look at this.
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Steven, the nuclear plant at La Hague is a big nasty ‘reprocessing’ facility that provides zilch in the way of power for commercial use. Our French nuclear power comes from the PWRs at Flamanville a little further down the Cotentin.
Re the ‘waste to energy’ plant, we should all be giving Scott Ogier a huge thank you for saving us from the Lurgi monstrosity that would have cost more than 100 million, not just 60 million, and would, as JohnnyB states, have provided us with power costing far more than a mere 17 per cent increase on current prices.
I actually think most of us could negate that 17 per cent by saving much more electricity. We squander huge amounts and I’m sure the average island household could cut consumption by a good 20 per cent with a little imaginative thinking.
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Spend 30million on a cable link they said. Cheap polish fuel for ever they said. This island has wasted millions and millions over the past 20 years. Absolutely shameful.
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Electricity to rise by 17%, extra ‘waste water charges’, price of food, travel and most utilities rising steeply, RPI forecast to drop below 1.2% next time ——— yeah right!!
Is the RPI calculated by the same people that are making such a hash of running our island by any chance?
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As stated by some of the posts above some of the reasons given by Gsy Electricity and OUR don’t quite add up.
As oil prices were given as the excuse I wonder if they managed to hedge the price the wrong way?
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Gilthead
Remember this is the company that managed to put £5 million plus in BCCI the day it was shut down.
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Oil prices have dropped sharply over the last few months and Guernsey Gas have advertiesd and issued price cuts. if prices needed to be increased why wasnt this done in stages ,it seems rediculous that now everyone will have to face a large increase at a time when many cannot afford it.
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Jackie
I totally agree with you, I would like someone to explain why we spent so much money on the cable link to France if we cannot make use of it.
And how does the high price of oil have an effect on nuclear power prices.
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Stephen John – It wasn’t far from the back of my mind!
I’m amazed that this thread hasn’t hotted up (like some do).
For goodness sake there are more posts on the chippy shutting. Perhaps that implies we are more concerned about a takeaway closing than the price of energy.
Well those devotees of the Northside Chip bar – it will now cost you 17% more to fry your own pommes frites!
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If the Press is correctly reporting the 17% price hike as being necessary to recover the extra cost of oil while its cost rose then, logically, the 17% increase should finish when that cost has been recovered.
The cost has now decreased substantially, so that 17% price hike should not continue into perpetuity, should it?
Although some increase might be required, I guess.
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David Cranch
Your not meant to catch on that the 17% increase should not continue into perpetuity.(LOL)
Can you (or anyone else) recall the fuss a few yaers back when Electricity kept prices articifically high in order to build up a cash chest?
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I did a quick analysis using a small scale graph for crude light oil monthly prices, so it is approximate.
Annualised average:-
2006 $67 (started at $69 ended at $58)
2007 $78 ( ” ” $61 ” ” $91)
2008 $93 ( ” ” $101 ” ” $40)
However, although the dollar price has dropped, the sterling purchase price has increased dramatically.
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Thanks, Devils Advocate. The sterling/dollar exchange rate may have something to do with it.
The OUR documentation is unusually terse on this price increase. Unless I’ve missed something, there is no explanation of the figure of 17%, and no indication that it is temporary.
In Carla-McNulty-Bauer speak 17% is less than one fifth. To numerate people it is close enough to one sixth.
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In the first post, Angry asked what the elderly will do next winter when the costs are high. We’re not elderly but a couple with 2 small children and we already struggle with heating and electricity costs – only heating the rooms we spend the most time in and wearing extra clothes to keep warm. Surely a more gradual increase as the costs increased would have been sensible – I’m not sure how we’ll find a lump sum extra each month.
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The electricity company were commercialised a few years ago and have apparently increased their profits substantially. Those profits belong to the tax payers as we are the major shareholder. Their employees are no longer public sector employees but have benefitted from commercial salaries and are now are entitled to bonuses, health provision and other perks such as generous discounts on goods and services. Is the taxpayer paying for this?
I cannot afford a 17.5% rise – it is unbelievable after we paid millions of pounds for the link to the french nuclear station. Another waste of money it seems. Are we all going to get a 17.5% pay rise next year – i think not!
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If the price of electricity is set to rise by 17% from April and the average household is expected to face an increase of £106 a year, I’d be happy to regulate the industry for, say £ 1/2 million per year, probably a fraction of the OUR’s fee, with consequent savings for the consumer.
I’m not suggesting our planet is over-regulated of course ( … much !!)
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I’m suprised no one has mentioned it yet but it would seem to me that the 17% price hike is entirely down to the OUR. They set the price in 2007 for a fixed period and as a result GSY Electricity could not make smaller increases along the way to compensate for increases in oil.
Profits made by GSY Electricity may be down to internal economies or it could be that the population actually uses more electricity
nowadays.
It’s clear to all that the price of oil has gone down in recent months but it is still hovering around the mid $40 per barrel, in 2007 i expect oil may have been around $20-$30 a barrel when the leccy price was fixed.
Thank our lucky stars the oil price has halved otherwise we would be looking at a greater than 17% increase.
Of course the flip side is that if oil had fallen dramatically in price everyone would be complaining that we had been paying too much for our electric while the price was fixed and that the OUR should have done something about it.
Come to that, what do the OUR do for us? another thread perhaps anyone!!
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Greg R, I guess you did not read my post on 27th Jan!!
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