Jersey Gas said that the ‘unprecedented fall’ in wholesale energy costs last year had enabled it to renegotiate prices that were already in place for 2015.
Rose Colley, chairwoman of the Jersey Consumer Council, said that the reduction was ‘good news’ but added that it seemed like a ‘knee-jerk reaction’ from the company after it had faced criticism from Islanders over its prices.
‘Whether it’s sufficient is a different issue and of course it’s remarkable that gas prices have gone down after there have been a whole series of complaints about the price of gas in the Island,’ she said.
John Davies, commercial director of Jersey Gas, said that the wholesale price of energy had seen ‘significant increases’ for a number of years and in order to prevent price spikes the company purchased its supplies in advance.
It had already bought its gas supply for 2015 before the sudden fall at the end of last year, something Mr Davies said that energy companies could not have predicted. He added: ‘With prices continuing to remain unusually low, we have been able to “unwind” our 2015 position and blend it with future forward purchases. The result is that we are now in a position to reduce our tariffs. This has been a complex process but it was a unique opportunity that, in the interests of our customers, we did not want to miss.
‘As a result of this, tariffs will be reduced by 3.5 per cent from the 23 March and as we have purchased majority of our requirement, we don’t expect there to be any significant changes to tariffs for 12 months.’
Assistant Chief Minister Philip Ozouf today said that he has been working with Jersey Gas since before January to understand the gas market and to find ways to lowering prices for Islanders. He added that energy prices were a ‘key priority’ for the Council of Ministers.
‘Gas is only one part of the fuel market and the latest data shows that there is a widening difference between other UK and Jersey fuel prices. We need to understand why this is and what we can do about it and that is why we have asked CIRCA to conduct a review of fuel prices in Jersey.’
The reduction comes after Deputy Geoff Southern lodged a proposition last month calling on the States to reduce Jersey Gas’s domestic tariffs by five per cent.
Today Deputy Southern said he ‘welcomed’ the reduction and added that he would now review his proposition in light of the announcement.
Meanwhile from 1 October Jersey Gas will introduce a new banded standing charge depending on the volume of gas that customers use.
The company said it would make it easier for customers to budget for gas through the year and would help the company separate the cost of supplying gas to homes and businesses from the cost of gas itself, ‘providing a fairer pricing structure’.
Today marks a significant victory for people power in Jersey.
In January, Jersey Gas said no to calls in the media and from consumers to cut its prices following a sharp fall in the wholesale price of oil.
The utility company, which is owned by an Australian investment fund, said that it was not possible to change tariffs until at least the end of 2015 because it had already contracted to buy gas for the year at a fixed price. The comments came as UK gas suppliers were announcing price cuts.
Were Jersey consumers yet again being held to ransom by a corporation exploiting a captive market?
Today, Jersey Gas announced that it was reducing prices by 3.5 per cent from next week.
What a difference a couple of months makes. So what changed?
The matter-of-fact press release issued by Jersey Gas this morning certainly offers no help.
The answer is that an Island company has been forced to bow to public and political pressure against a background of price cuts elsewhere.
The Council of Ministers, and in particular Senator Philip Ozouf, have been pressing for a better deal for consumers across the energy sector. Their work has been complemented by backbenchers, including Deputy Geoff Southern, who tabled a proposition calling for the States to exercise its right under Article 93 of the Jersey Gas Company Law to regulate pricing.
This work – together with calls from the JEP, which first highlighted the power of the States to step in, and its readers on the letters pages of the newspaper – has helped to secure an important victory for consumers.
That victory was to get a company quick to say no to consumers to do something in their interests. As far as prices go, it is a small concession. Even after 23 March, Islanders will still be paying too much for their gas.
