THE cost of electricity is to be reviewed by the Island’s competition watchdog against a backdrop of an impending 12% price rise.
Over the next 12 months, the Jersey Competition Regulatory Authority will look at the electricity market to establish whether there could be factors affecting competition and benefits to consumers.
The study has been welcomed by the Jersey Consumer Council, which warned that while Jersey Electricity protected consumers by ‘hedging’ with suppliers, prices in the Island were ‘beginning to catch up with other jurisdictions.
In June, Jersey Electricity said prices would remain frozen for the rest of 2023, but would rise by 12% in January, the equivalent of around £150 to the average household bill of £1,200 per year.
The authority’s most recent study in this area took place in 2012, and chief economist Peter Hetherington said the current economic situation made it appropriate to embark on a fresh piece of work.
“Electricity is an unavoidable household expense and a substantial portion of household expenditure,” he said. “We are very aware that, in the current economic climate, there is significant pressure on household budgets – this study is being launched in the context of the continuing public debate on ‘cost of living’, alongside the Government of Jersey’s drive for decarbonisation.”
Mr Hetherington said the study would focus on the structure and behaviour of the market itself, rather than the action of any specific business or organisation.
Consumer council chairman Carl Walker said he was pleased to see the study launched.
“Where there’s no competition, as in Jersey for electricity, anything that tries to benchmark or compare whether consumers are getting good value is really helpful, as long as the findings can be acted on,” he said.
“Jersey Electricity looks to protect consumers by hedging in negotiations with suppliers, but it seems with the forthcoming new year rise, prices here are beginning to catch up with other jurisdictions.”
The study follows Jersey Electricity’s announcement of the new year price increase.
Chief executive Chris Ambler said at the time that the turmoil in European energy markets over the previous 18 months, and general inflationary pressures, had led to the decision to schedule the price rise.
Mr Ambler said that even after the increase, it was estimated that Jersey’s standard domestic tariff would be around half the UK level. Consumers in the Isle of Man experienced a 34% rise in electricity prices between 1 April and 1 July, while Guernsey Electricity announced a 13% rise from 1 July 2023.
Jersey Electricity and the government were both contacted for comment but had not replied by the time of going to print.