Friday 26 May 2023
An independent review of electricity charges across the British Isles has found that for customers on a standard tariff, bills in Guernsey last year were the second cheapest, and significantly lower than the UK.
For economy tariff customers, only Jersey Electricity, Manx Electricity, and one Northern Ireland supplier were cheaper than Guernsey Electricity in 2022. Local bills were only slightly higher than in the Isle of Man.
The study was conducted by independent consultants Frontier Economics, which also carried out an efficiency review comparing Guernsey Electricity to Jersey and the Isle of Man's power utilities. That found the company was performing well compared to its island counterparts, and was classed as 'particularly efficient' in a number of measures.
The efficiency review compared the three utilities and the costs that they incur against various criteria. The analysis considered overall operating costs and total expenditure, which included capital investment. It also assessed the net operating costs, which excluded the cost of electricity import and generation, as those are subject to external factors outside each companies' control.
To provide a like for like comparison, costs were adjusted to reflect the size of each company, using different measures. These were:-
- the cost incurred by each company, per customer
- the cost incurred, per unit of electricity supplied, and
- the cost incurred, per kilometre of network, including subsea cables.
Frontier Economics then carried out a 'composite' calculation, combining all three variables. Its conclusions were:-
- On all measures, Guernsey Electricity had the lowest net operating expenditure - excluding import and generation costs.
- Based on length of network, Guernsey Electricity was 'particularly efficient' for net operating costs, which were 32% lower than average for three utilities. It also had lowest total expenditure and overall operating expenditure, including import and generation costs.
- For cost incurred by each company per unit of electricity supplied, Guernsey Electricity again had the lowest operating costs when import and generation were excluded. Total costs per unit, including capital investment and import/generation were also lower than Manx Utilities, but slightly higher than Jersey Electricity.
- On a cost per customer basis, Guernsey Electricity had the highest overall operating expenditure and total costs. Those were the only measures where it was outperformed by both the Jersey and Isle of Man utilities.
- When all factors were combined in a composite comparison, Guernsey Electricity was again classed as 'particularly efficient' based on net operating costs. These were 26% below the average for the three companies three. For total expenditure and overall operating costs, if was either average or slightly below average, being higher than Jersey Electricity but lower than Manx Utilities on both measures.
Frontier Economics concluded:
"Guernsey Electricity's total bills tend to be lower than most other suppliers, and higher than Jersey Electricity's for both domestic and industrial customers.
"There are a number of differences between Guernsey Electricity and Jersey Electricity. These non-efficiency reasons can result in differences in tariffs. For example, Guernsey Electricity's smaller scale and less dense network, regional wage differences, transmission and distribution losses, and differences in security of supply."
The STSB's full decision notice and the findings of the Tariff and Efficiency Benchmark Review can be found at www.gov.gg/GELtariffdecision.
