Could the chance of cheaper, greener electricity be lost if the States of Guernsey agree with proposals to scrap the independent regulation of Guernsey Electricity’s tariffs and prices?
Currently GEL’s tariffs and prices are regulated by the Guernsey Competition and Regulatory Authority – an independent body with an independent board. Next week, the assembly will be asked to vote for future pricing structures to be decided instead by the States Trading Supervisory Board, which is the shareholder of GEL.
The Little Green Energy Company says: “We believe the net effect of this being voted through would be an unfair playing field, whereby GEL is regulated by its own shareholder and not by an independent regulator.”
“Tariffs and prices will be adjusted to make it financially unviable to have independent, renewable electricity generation on the island, not only from our company but others wishing to enter the market.”
“In media statements, the CEO of Guernsey Electricity has suggested that a tariff reflective of a 50% fixed and 50% variable cost should be introduced. This would bring the unit cost of electricity so low that it is not economically viable to install renewable systems, but could also increase fuel poverty. You’ll pay half of your bill without turning on a light.
“The policy letter states that GEL now needs to generate additional revenue ‘to enable it to continue investing in the electricity infrastructure at the level required to support the energy transition and the Island’s new Energy Policy.'”
But the LGEC questions how, without independent regulation, islanders could be sure that this additional revenue would be spent on infrastructure. “With no independent regulatory oversight there will be less transparency for islanders and more opportunity for hidden costs. The policy letter, as well as other consultation documents favourable to GEL, have appeared since our company has applied for and been granted its energy licence.”
“Our plan is to install solar panels at our own cost on islanders’ ‘homes and local businesses’ properties to facilitate the goal of Guernsey’s own Energy Policy. We are working towards the island becoming carbon neutral by 2050 whilst bringing renewable energy to those who cannot afford to buy their own panels. We want to provide islanders with cheaper, clean, locally grown electricity and we respectfully ask deputies to vote against the policy letter, which goes against the interests of islanders and fair competition.”
In response, Alan Bates, Chief Executive Officer at Guernsey Electricity, said: “We fully support on Island renewables as part of the diversification of our energy supply and welcome competition where it benefits the community. However, we do not support creating inequity in the market where customers, who can install renewables, leave the remaining customer base picking up their share of the network costs.
“The cost of the network and security of supply should be spread fairly across all customers, so the tariff proposals ensure that if Islanders choose to install private renewable systems whilst still being connected to the network, others do not carry the financial burden. If these changes are not passed, our remaining customer base that do not have their own private renewables will subsidise those customers who able to invest in this technology.
“To support the transition to an electric future, Guernsey Electricity proposes to change tariffs in order to provide transparency for customers of the true costs of electricity and of providing the Island’s valuable network and security of supply. This will allow electricity customers to have visibility on how costs are created and how they are recovered. Customers investing in heat pumps, electric vehicles, renewables and energy storage will then have clarity and transparency on the unit cost of electricity.
“The restructuring and rebalancing of tariffs necessary to enable this transition – and reach the States of Guernsey net zero target in a fair and transparent way – are being debated by the States next week. The pace of the transition necessitates these changes to provide transparent price signals and create an open and level playing field for competition in the energy market and all these changes support the States’ Energy Policy.
“The work and research behind the policy letter have been developed over many years, with a public consultation held in 2018. This will provide the long-awaited mechanism that allows Guernsey Electricity to plan and implement its capital investment programme necessary for further decarbonisation of heating and transport on Island.
“Our intention is for any restructure to be revenue neutral for the business, so that for the vast majority of customers, there will be minimal difference to their overall bills for electricity. The proposed structure will clearly show how much it costs to be connected to the electricity grid so customers can make informed investment decisions about their use of energy. The rebalance will also make available cheaper electricity prices to facilitate sensible energy use and allow customers to access our variable rates of imported electricity. Our current proposals include the introduction of lower tariffs at weekends so Islanders can take advantage of reduced rates when it is convenient.
“For those wishing to install solar panels, they will still be able to and will benefit from clearer tariffs that will help them understand the implication of their investment. They will also be able to rely on a secure grid supply for when their intermittent generation is not available.”