The company made a profit of £4.1m in 2016-17, which is key to funding essential infrastructure investment and maintenance. Tariffs also remained frozen for the fifth year in a row. However, Guernsey Electricity says the island is now facing a challenging set of circumstances.
Energy import costs have risen and will continue to rise as a result of exchange rates being affected by the UK’s decision to leave the European Union, according to the company’s latest annual report. In addition, the cost of heavy fuel oil has also increased due to the weak pound against the dollar.
‘Following our return to profit last year we have seen consistent operating profit performance. This has been achieved by striving to keep costs under control and the benefit of advantageous hedged exchange rates compared to current market conditions,’ said chief executive officer Alan Bates.
‘This has allowed tariff levels to remain unchanged for the fifth year in a row and for further investment in our electricity supply infrastructure to meet our strategy of secure, reliable, sustainable and affordable electricity supplies for the island.
He stressed that the company was continuing to control expenditure through a relentless internal focus on controlling costs and optimizing value, with an ongoing transformation programme to make Guernsey Electricity fit for the future.
‘Since the Brexit decision in the UK however, we have seen an adverse change in the exchange rates impacting our energy import costs and the cost of heavy fuel oil has increased substantially,’ added Mr Bates.
‘As both these areas have significant impact on the price of electricity, and with further investment in new diesel generators and the direct subsea cable link to France, this means we will need to review tariffs in the near future.’
Guernsey Electricity’s chief executive officer said the company was currently working with the States Trading Supervisory Board to ensure any tariff evolution was at a level to adequately fund necessary asset investment through debt and equity, whilst maintaining an appropriate level of focus on cost efficiency within the business.
‘Any near term tariff changes will need to reflect both cost pressures from the wholesale energy markets and foreign exchange rates together with the funding of additional investment required in electricity infrastructure,’ said Mr Bates.
‘Remaining at the forefront of the Board’s assessment on all expenditure is the affordability to our customers and we remain committed to ensuring changes in tariffs are understood and provide stability and certainty going forward.’