The Guernsey Competition & Regulatory Authority (GCRA) says indecision about the regulatory framework for Guernsey’s electricity sector caused confusion and uncertainty over several years and is now leading to recent misinformed statements circulating in the public domain.
The States decision in September 2021 (P2021/65) regarding responsibility for controlling electricity prices and tariffs should, however, resolve the confusion and uncertainty by the end of this year. The Authority currently has regulatory responsibility for Telecoms, Post and Electricity, as well as Competition Law.
In 2015 the States of Guernsey, who is the 100% shareholder of Guernsey Electricity Limited (GEL), agreed that it would effectively remove electricity pricing review and control from the GCRA’s remit, and self-regulate the sector:
Resolution 1: “To direct that Guernsey Electricity Limited and Guernsey Post Limited be made exempt from the licensing and regulation provisions within the respective electricity and postal laws by no later than 1st January, 2016.” (Billet d’État No VI dated 13th February 2015).
As a result of that policy decision and in anticipation of the switch over, the GCRA charged no licence fees to GEL from the beginning of 2016, scaling back its involvement significantly. From 2016, GEL and the GCRA operated in a ‘policy vacuum’, which impacted on the electricity sector given the policy deadline of 1st January 2016 had passed and the situation continued for several years after.
However, when it became apparent over 2019 that the 2015 States decision was being reconsidered, the GCRA publicly announced that it would welcome approaches from GEL regarding tariff reviews and raised the necessary licence fee to support that.
No requests for tariff changes were in fact received from GEL and GEL also did not avail itself of the option to rebalance its tariffs, despite the GCRA’s communication in 2012 which gave it the flexibility to do so.
The recent States decision in September of this year to transfer oversight of pricing and tariffs from the GCRA to the States Trading Supervisory Board means that many of these responsibilities will now be the responsibility of the STSB, in effect returning to the policy decision that had been passed in 2015.
The clarity arising from this decision has been welcomed by the GCRA. While the GCRA will continue to undertake its Competition Law responsibilities for the electricity sector, it says that the policy vacuum, and GEL’s failure to make use of the freedom the regulatory framework provided, has been unfortunate and has possibly caused unnecessary and expensive delays in establishing a sustainable and robust network to meet Guernsey’s future energy needs.
