GUERNSEY ELECTRICITY should have plenty of money to fund its future capital projects, as long as the company is run efficiently, the regulator has said.

John Curran, director general of the Office of Utility Regulation, responded after Guernsey Electricity claimed prices would have to rise to pay for projects that are needed to secure supplies to the island.

The States-owned utility announced yesterday that it had suffered a loss of £834,000 for the year ending 31 March.

It said its future plans, to invest in an extra cable link and to buy another on-island diesel generator, were in danger if the company was not making sufficient profit.

But Mr Curran said that the OUR had taken these projects into consideration when it set the current price control in 2007.

‘In 2007, we looked forward 10 years to see the level of cash Guernsey Electricity was going to need to fund future capital expenditure,’ he said.

The company currently had between £14-£16m. in its ‘save-to-spend’ reserve and he said that the amount would be plenty to get the projects started – possibly in 2010/2011 – and more money would be added to the account through continued revenue to fund their completion.

‘We profiled that and set tariffs so that, as Guernsey Electricity needed the money, it would become available,’ he said.

‘We set the price control in such a way that if the company is run efficiently it should have no problems meeting its capital expenditures.’

It was agreed in 2007 that there would be no price increase during 2008 but there would be a rise this year.

Electricity prices went up by 17% from 1 April.

‘The 17% rise equates to about an extra £5m. and is for the recovery of the actual cost that Guernsey Electricity has already incurred because of the volatile energy market,’ Mr Curran said.

He added that the utility had been given every opportunity to ask for an additional price increase in 2008, but it had failed to do so.

‘If their concern that prices need to go up is real I would be surprised that they have not come to ask us for a price review,’ he said.

Mr Curran accused Guernsey Electricity of making contradictory comments about the state of its finances.

‘We met with Guernsey Electricity last week and they assured us there was no risk to the save-to-spend reserve,’ he said.

‘What they are saying publicly is different to what they are telling us in private.’

Guernsey Electricity said it reported a loss despite meeting all operational expenditure targets set by the OUR.

Mr Curran said that he was not in a position to say whether the company had been working efficiently.

‘In 2007, we identified savings that could be made,’ he said.

‘We will be reviewing whether they have been implemented next year and we will look at whether there are more savings that could be made.’