Big electricity price rise on way
Friday 31st July 2009, 2:30PM BST.
ELECTRICITY prices will have to rise substantially to secure supplies, said Guernsey Electricity.
The States-owned utility called for the increase yesterday after losing £834,000 for the year ending 31 March.
‘Our prices went up 17% in April, so that should result in us breaking even this year. But that does not give us any more in terms of helping us with investment in the infrastructure,’ said managing director Ian Watson. ‘Our fear is that we could be storing up big price increases in the future.’
Mr Watson said the actions of the Office of Utility Regulation, which controls prices and which decided there was to be no increase for 2008/2009, was threatening the company’s future.
‘The ideal situation for us would be to have control over our own profit and loss account and be responsible for our own results – and, quite simply, we are not,’ he said. ‘The board’s concern is quite simply to maintain the security of supply.’
But OUR director-general John Curran has hit back.
‘The current price control was set in 2007 and the company accepted that decision. It was aware then, as now, that there would be a delay in recovering certain costs and that remains the case
‘Early in 2008 we made it clear to GE that it could, if it believed it necessary, make a request for the price control to be reviewed. However, to date it hasn’t made any such request, which seems odd given its comments now.’
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Why have the Directors of GEL not applied to re-open the price control? If they believe prices need to rise this is the proper route as I understand it?
The Directors of GEL must have been aware they were heading for these substantial losses early in the financial year (perhaps a year ago)- it was at this stage they should have first considered applying to reopen the price control so why have they still not acted?
I note in the accounts the cash reserve continues to fall, the pension scheme has a large deficit and the £800k loss would have been much worse had it not been for a large tax credit.
The company has made substantial operating losses for several years only masked, until this year, by interest from the fast dwindling cash reserve. This reserve was built up from previous customer charges as part of the so called “save to spend ” policy – what were they saving for they cannot now fund I wonder?
The States are the shareholder of GEL so why are they not acting either?
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You raise some very goods points Neil. Yes, there are many financial problems engulfing GEC brought on by total incompetence by a Board, which is out of time. Of course we the consumer will pay in the end for their incompetence, because that is the way it happens here in Gsy. The arrogance of these men is there for all to see. I bet they are still picking up their fat salaries…. Sack the whole Board and ask questions about Parkinsons role in all this…..I mean he is such a saviour of our States!!!!!!
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GEL should take this one on the chin, Bad management full stop.
The States knew market conditions were not good with the Pound against the Euro so why did they not act sooner.
Politicians just don’t seem to act on things quick enough in this Island until it’s to late.
Now the Consumer has to suffer again!
Oh what Joy!
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I am not sure that the reported annual losses are any kind of demonstration of incompetence by the GEL Board.
Rather they are the results of a discipline applied by OUR to counter the previous policies established and run when under political control, of acquiring huge capital reserves “in case” spending was required. Often that money was directed to uses that did not directly benefit the electricity consumer. For example it was a close call that £14m was not wasted on a data centre.
As OUR has stated today, GEL still has plenty of capital available and is acquiring it at £5m per annum. OUR is doing a fine job keeping a tight watch on a utility that could easily skim-off masses of cash from islanders without need.
Now perhaps we could apply its disciplines to the gas supply!
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what would happen if the whole island used low powered bulbs and watched what they used? would it cause GE to fold? i find the whole island to be very wasteful when it comes to electric. lights left on 24 hours a day in window displays etc. shops and garages are lit up like christmas trees most of the time. we are being told to use less electric, but how will that help GE in the long term. will we turn off the station and just use the french link? what about wind turbines and power from the tides?
what are we going to do for the future? we cant keep burning oil for power. it wont last. would the last person please switch off the lights….
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So,GE want to put their prices up to cover costs etc but are told by an essentially States body (namely the OUR) that they aren’t allowed…
meanwhile, the States spend millions unnecessarily on a soon to be outdated incinerator that no one wants and consistently overspend millions of our Tax money on States projects, and there’s no one there to regulate them….
the irony.
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