IT is becoming increasingly clear that 2009 will be a tough year for business, government and ordinary Islanders.

Economic factors ranging from the scarcity of credit to poor returns on savings will take their toll, but many — especially those on low incomes — will see the proposed 25 per cent increase in electricity prices as the final straw.

Not unnaturally, the States, who have a 54 per cent stake in Jersey Electricity and control 86 per cent of the voting rights, have been urged to block the price rise on the grounds that it is both unreasonable and against the best interests of both private and commercial consumers.

It is argued that there is no point in the States having a controlling interest in a utility if it is not used to protect the wellbeing of Islanders. Chief Minister Terry Le Sueur, on the other hand, says that there should be no government intervention in what he describes as operational matters.

He also points out that the Jersey Competition Regulatory Authority, which has raised no objection to the new price level despite having been consulted, must be the arbiter in such cases.

Although it is difficult to accept that the States should never be prepared to stand aside and let potentially damaging events unfold when they have the power to take action, it must be acknowledged that this no straightforward situation.

The JEC can be seen as an organisation which, in recent years, has done very well, lately showing a return on sales of more than 12 per cent and significant rises in profits. It can also be seen as an organisation which appears to have made errors in energy purchasing policies for which the public are now expected to pay.

The fuller picture, however, is of a company which managed to peg prices for a two-year period but now faces wholesale energy prices 40 per cent higher than last year and will be absorbing some of that increase without passing it on to clients.

In spite of this, the JEC is bound to be compared with the Jersey Gas Company, which recently cut its prices. In addition, the JEC pricing plans will be seen as severely at odds with the more general trend towards falling energy costs as the price of oil falls.

Perhaps the worst that can be said of the JEC is that its forward price hedging policies have been less successful than anyone might have hoped and that although the cable link with France undoubtedly offers security, it does not guarantee low prices.