Senator Philip Ozouf, who is an Assistant Chief Minister, made the comment after a review by the Channel Islands’ Competition and Regulatory Authorities found that there were ‘no reasonable grounds to suspect’ that the Jersey gas market was breaching competition law.
CICRA was commissioned to look into the gas, petrol and heating oil fuel markets.
However, it found there were ‘no reasonable grounds to suspect’ that the fuel markets were not acting in the best interest of consumers.
The watchdog added that a second more detailed look at the sector was not proposed as a formal investigation can only be initiated if there are ‘reasonable’ suspicions that there may have been a breach, or intention to breach the competition law.
However, Senator Ozouf said that he had told CICRA that their review was unlikely to be ‘sufficient’ to give States Members or Islanders ‘the comfort they need as to the levels of gas prices’.
The Senator said that if, following a second look at the sector, there was evidence to show that gas prices were unreasonable then he would bring forward ‘full price regulation of gas’.
He has now asked the States’ Economic Advisor to meet with the watchdog to agree additional analysis.
The recent CICRA report concluded: ‘Given lack of evidence of any excessive margins or returns based on the information provided, the limited value in undertaking a full review of historic detailed business decisions and the lack of an obvious comparator for benchmarking, there appear to be no reasonable grounds to suspect that the Jersey gas market is not acting in the best interests of consumers at this time.’
Senator Ozouf added: ‘Gas prices are a major concern for many people.
‘I want to be in a position where customers have confidence when they are being told that their gas prices are fair and reasonable.
‘I won’t hesitate and I’ve got full support of the Council of Ministers and I think the full backing of States Members to bring forward full price regulation of gas if there is evidence for the need to.’
During today’s States sitting Deputy Kevin Lewis was due to ask Economic Development Minister Lyndon Farnham what action he was taking to prevent gas prices ‘rising beyond the reach of people on low income’.
His question comes after Jersey Gas announced that it was changing its billing structure by increasing its standing charge and decreasing the cost per unit of gas from January.
The company said the move would help spread the cost of domestic central heating more evenly through the year.
JERSEY’S fuel market is a wildly erratic, shadowy and frustrating beast. Before Christmas, the price of petrol, thanks in part to a promotion by the Jersey Evening Post and Motor Mall, fell to below £1 a litre.
Within days, and fuelled by other retailers such as the Co-op, the cost of motoring had been driven down to its lowest level for years.
A competitive market was working. And yet questions remain about the monopoly position enjoyed by wholesaler Rubis, the owners of the Island’s fuel farm, and their disproportionate influence on the deal consumers get at the pumps.
In January the spotlight wa thrown on gas and electricity price after a major UK gas supplier bowed to political and public pressure to cut bills in the wake of falling oil prices.
The comparison between the two sectors shows just how crazy the Island’s fuel market is.
As has been reported by the JEP and verified by the Jersey Consumer Council, Islanders benefit from some of the lowest electricity prices in Europe, with bills insulated from fluctuations in oil prices because of our overwhelming reliance on nuclear energy sourced from the Continent.
Gas, however, is a totally different story for several reasons.
For a start, gas prices in Jersey are some of the highest in Europe. That situation is compounded by the fact that whereas Jersey Electric, a publicly owned utility, publishes its accounts for all to see, Jersey Gas is a closed shop owned by an Australian fund.
So why have gas prices not come down here as they have in the UK?
Jersey Gas says that it buys in advance so cannot respond quickly to changes in world prices.
That argument will not resonate with consumers who have seen prices rise for years in line with increases in the cost of oil.
Since January 2013, oil prices have been falling and yet gas bills have continued on their upward trajectory.
Something is wrong and Islanders are paying the price. The closed local market is failing consumers. CICRA, the islands’ competition regulator, must investigate the fuel market and use its teeth to force the issue.
But that is not the public’s trump card. Article 93 of the Jersey Gas Company Law, a little-known statute from 1989, gives the States the power to step in and regulate prices if it is in the public interest to do so.
That time must surely have come.
