(4.2) Peak Demand Contribution

The cost of constructing and operating the conveyance network is significantly affected by the power transfer that the network is designed to service, and hence by the aggregation of the individual power transfer requirements of network users. The Guernsey electrical network is designed on the basis of being able to satisfy such maximum demands rather than mean energy volumes.

The power transferred through the system is not constant, but varies with the time of day and season. In general terms, for Guernsey, the system is required to meet maximum demand on a winter, weekday evening and minimum demand on a summer night. Peak related charges are levied on each user, based on the contribution to system maximum demand made by that user. This provides an economic signal as to the cost of providing sufficient network to meet peak demands.

It is recognised that certain users have power requirements that make major contributions to system peak power transfer, whilst others make no contribution at all. Over many years, GE has maintained tariffs which encourage customers to use electricity at off-peak periods thereby managing demand. GE believes that off peak tariffs, which typically encourage users to consume energy overnight and during the early afternoon, and discourage consumption at early evening peak times, enhance network efficiency and reduce total network costs for a given level of energy delivery. In summary, usage profiles are related to the tariff on which the customer is charged.

Given the relationship between user load profiles and tariffs discussed above, it is reasonable to classify users by tariff and seek to establish the contribution to network peak demand made by each tariff group.

GE believes that variations in tariffs in this way is fair and intends to vary tariffs (including UoS tariffs) based on peak - off peak usage based on mathematical modelling. GE has already commissioned mathematical research to underpin this exercise.

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