Jersey Electricity said the change would be introduced from 1 January, adding around 80p a week to the average domestic bill.
The increase is the fourth in Jersey in seven years, and the first for 15 months – after the company deferred its planned April 2020 2.5% increase by six months to help those affected financially by the pandemic.
Last month, Jersey Gas announced a 13.2% price hike that will add up to £15 per month to an average bill, while local house prices have spiked every single year since 2017, with the average home now 2.5 times more expensive than in the UK. The increases have prompted concerns about the rising cost of living in the Island.
Meanwhile, the recently unveiled Government Plan update – if approved – could see Islanders paying GST on goods worth more than £60 bought from online retailers from the start of 2023, while road fuel duty could rise by 5p per litre at the start of next year.
Jersey Electricity chief executive Chris Ambler said he was ‘acutely aware’ of the cost impacts being felt by Islanders.
He said: ‘Announcing price rises is never an enjoyable part of my job.
‘Wholesale European electricity prices have trebled year on year but, with our contract structure, our hedging process and the protective measures we have in place, we have hugely sheltered customers from the volatility of the market.’
He added: ‘Even with the rise, electricity prices in Jersey are still cheaper than elsewhere. In the UK, the regulated price cap has gone up by 21% in the last year alone, and is almost 50% higher than Jersey Electricity’s prices. Furthermore, the UK regulated price cap is expected to increase by 30% or more next year off the back of a continued tight wholesale market, so we could easily see UK electricity prices grow to become twice that of Jersey.
‘In that context, I am actually very proud of what the team has achieved in protecting the Island through this difficult period of market volatility.’
When asked if the prices were likely to rise further, he said: ‘It’s certainly going to be a tight market this winter, and it is difficult to say what is going to happen next. However, I am not expecting to make any further price increases next year.’
Around 95% of the electricity supplied by Jersey Electricity is imported from low-carbon, hydro and nuclear sources in France through three undersea cables.