Cut power prices at our peril, JEC warns politicians
Saturday 18th April 2009, 2:59PM BST.
A PROPOSAL to slash electricity prices by using an ancient law in the States would make the JEC effectively insolvent if it were successful, according to the company’s chief executive.
Chris Ambler, the man at the top of the power generation business, has warned that if politicians accept the proposal by Senator Alan Breckon, the decision would put the company’s future at serious risk.
Mr Ambler said that if the Senator was successful, the JEC would be ‘flipped into a deeply loss-making situation’.
Senator Breckon is asking fellow States Members to support the use of a 72-year-old law to reverse a 24 per cent increase in electricity tariffs introduced at the turn of the year. He wants a reduction of 20 per cent from the present tariffs, with the lower rate in place by 1 July.
• Picture: JEC chief executive Chris Ambler who is the subject of the Saturday Interview in today’s Jersey Evening Post. Picture by Tony Pike (00669292)
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suprise suprise
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I’m okay i’ve got my oil lamps and cook with gas!!
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dear chris, words come easy. Put Jersey entire finacial report in detail on-line so that we can verify what you are saying and more. If not you are blowing hot air.
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thought alot of power came from france?you cant justify a 24 per cent increase thats more than ten times the cost of living. would of been fine to put up at 3 per cent say each year to ease the burden.!! fuming!!
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If this were to happen, I can see the non-States shareholders suing the States for confiscation of their assets. I trust that the States will not be silly enough to let this happen.
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Jersey is the only place that I know where electricity prices have risen. Everywhere else prices are falling.
This is yet another example of the rich getting richer and the poor getting poorer.
Electricity is only the first of many areas that need to be investigated. We should then move on to all the other areas where the ordinary people of Jersey are getting ripped off!
May Senator Breckon be successful in this. And then take on the rest of them!
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Perhaps the JEC would have found more sympathy had they not increased remuneration for the directors by an average of 11%, and not increased the shareholders dividend by 53%.
It’s clearly seen as a cash cow by investors as I note the share price has increased by 44% in the last year.
And to increase electricity charges during the winter months when people will have been hit the hardest is particularly greedy.
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#6 Islands unite: ‘Jersey is the only place that I know where electricity prices have risen.’
While I agree that the JEC’s monopoly needs regulating, over the last year or two oil prices have risen over 40 per cent and electricity prices have risen accordingly. While oil prices have now reduced, there will inevitably be a hangover while stocks bought at the higher prices are used up. UK electricity prices have reduced by 10 per cent over the last six months but they are still much higher than they were two years ago.
#4 Sean: ‘thought alot of power came from france?you cant justify a 24 per cent increase thats more than ten times the cost of living’
The 24 per cent increase has to be seen in the context of the increased oil price, from which electricity is generated, not in the context of cost of living rises. Though most of Jersey’s power comes from France and is predominently generated by nuclear power, since nuclear completes with power stations that use oil nuclear producers will have put up their prices in line, purely because market forces dictate they can.
Also, since sterling has weakened against the Euro over the last year, electricity from France will be more expensive. A double whammy.
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Good for Senator Breckon!
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it should be flipped into a loss making situation
as the states own the majoriaty of the jec shares.
some essential utilities should,nt matter if they lose money as they can make up the loss on other services. good on you mr.breckon.
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Could they not cut the dividend and director bonuses? Once again the poor must subsidise the rich.
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Bonuses for directors,shares,and other goodies may have some bearing on what Chris purports,divi for shareholders etc.all big buisness behaviour which we have all seen and felt the effects of lately..the difference here is we are a captive audience,we can’t shop around and so are stuck,so there is a moral obligation here for J.E to supply the old ,infirm and not well off with electricity that is affordable,whilst also not ripping the rest of us off…just look at the profits made,and yes I do think it’s fine to make a profit, but they have no competition and so the profit should be in keeping with the situation.
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Honestly, who here actually cares if the businessmen and shareholders at the JEC make a loss? The only thing that we should give a damn about is whether the people if this island are making a loss. And we are paying ridiculous prices so that these people who are detatched from normal society can make money.
Good on Senator Breckon for sticking up for the average person, instead of being like the rest of them and just listening to the rich.
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If the JEC cant survive without this outrageous 24% rise then so be it. I’m sure other suppliers would be more than happy to meet the Islands requirements. There should be competition in this marketplace. In the UK and elsewhere you can choose who supplies your power, water and phone, so why should it be any different here. We should as end users be able to purchase our power requirements directly from the French for example.
If the JEC cant manage to cope within a modern marketplace and supply power at a reasonable rate then move over and let an operator who can.
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Electric bill up by more than 40% on same period last year. What a rip off.
I hope the Directors and shareholders have a good night out on me!!!
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if the JEC becomes loss making, where will the funds come from to subsidise it? the states? if so, thats your tax paying money being used to support it. one way or another its got to be funded from somewhere.
lets get real here, the JEC is a quoted company, in it to make money and deliver returns for its owners.
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Well done Alan – don’t think it’ll get passed by the OBC but at least you’re keeping the faith.
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Exactly, at your peril!!! Not ours…The figures don’t even bare thinking about, maybe you should get rid of the shareholders that would be half your worries gone!!! Its not rocket science don’t even try and give us that pile of old tosh .. suppose some glorified thief is going to try and justify this…
Almost every islander pays for electricity, the math is simple.
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my bill was almost double of last year,and i spent most of the winter freezing by keeping heating on low.
it,s a disgrace as most pensioners are at home,so are using the most energy,its robbing the poor to pay the rich have they never heard of hypothermia? the biggest killer of not so young people.when i worked in hospital a lot of elderly patients were treated for it.
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Well what are you all going to do about this then only we can stop this ????
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#18 Jenny: ‘maybe you should get rid of the shareholders that would be half your worries gone!!!’
Companies use shareholders to raise money in order to invest in infrastructure. This is particularly true of a utility company such as the JEC and in the current market when credit is difficult to obtain from banks.
If shareholders didn’t provide this money, the taxpayer would.
#7 Jerry
Thank you for a very interesting post. According to the latest set of JEC’s financial statements, the rise in dividends paid was 30 per cent but even this seems very large, particular given how shares in general are performing at the moment. I wonder what the regulator made/will make of it?
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No electricity will mean that everyone will be in the dark – no change there then.
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I have no reason to doubt Mr Ambler’s maths, but that does not explain or excuse the monopoly position of the JEC.
Senator Breckon the public and have every right to question a 24% price hike at a time when there is 0% inflation and emery prices have taken a hit.
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Jenny #18 “maybe you should get rid of the shareholders” The main shareholders are the States of Jersey!
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Chris Ambler J.E.C Really….. if that’s the best excuse you can come up with for what is a total abuse of a protected and privelidged trading position,” I know let’s scare ‘em ” so they capitulate,whatever you are being paid is far too much…Ah perhaps we have stumbled on the real reason for such a disproportionate price jacking
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jec and condor same story no competion untill we have this they will keep on taking the mick out of all of us
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Take a look at the bigger picture………..no profit = no tax income, No dividend to the States, who do you think the short fall will be paid by…………Us the taxpayers thats who!
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well mr mbler, what a shock you say that! You must think the public are complete idiots! On National t.v. a few weeks ago it stated gas and electricity had been REDUCED to the companies by 40%!! same old Jersey, charge what they want because they no there is nobody in the states with an ounce of intelligence or backbone to do anything about it!
point 58- all very logical but there is one point everyone misses. Why have they also put up the standing charge by 24% as well?? explain that if you can! i can sum it up for you in one word, GREED!!
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#28 lonedealhunter
My standing order was halved about six months ago but was very high to begin with. It’s interesting that yours has gone up. In the UK, electricity suppliers have been accused of increasing standing orders to improve their cashflow. Again, I wonder if the regulator has said anything about this.
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I have written to the JEP about this issue beforehand, after I checked the energy prices charged by EDF (France’s electricity supplier) who supply over 90% of the island’ electricity. I was shocked to see that the markup seems to be over 25%. This was slightly before Jesey energy prices themselves were hiked by 25% also.
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Scandalous….electricity is a basic need in modern life, not too unlike water. What would happen if our water bills were to increase dramatically too?
Why when there is deflation and prices are dropping everywhere are prices from JEC going through the roof?
And don’t tell me we are paying for what JEC has already pre-paid because thats rubbish. Most large companies have “options” to buy commodities for this purpose when the prices change in their favour!
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#31 BS Deluxe
Assuming you’re talking about my post, what I wrote was that the relatively high price relates to the hangover of stored oil. If electricity producers who use oil are charging a higher price, so can everyone else.
I am interested to know more about the options you mention. I understand that companies such as the JEC may hedge on price or the exchange rate but if they go the wrong way this increases the price rather than reduces it.
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32 Michael
“Electricity call and put options offer their purchasers the right, but not the obligation, to buy or sell a fixed amount of underlying electricity at a pre-specified strike price by the option expiration time. They have similar payoff structures as those of regular call and put options on financial securities and other commodities”.
If JEC do not hedge in this way then I would be very surprised.
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Dealing with a supplier who uses a different currency is not a good idea especially if you are looking for continuity of pricing. Wild fluctuates like we have had this last year is not good for business. Last summer I was getting 1.47E to the £. A month or so ago it was 1.08E to the £.
I however knew the price was going to go against me so had bought enough euros in at 1.47E to the £ to pay for my needs this time around. Maybe the JEC should have done likewise? Most people in the know would have done this, maybe the JEC weren’t aware this swing was on the way?
I would also have to point out that the JEC is only really a conduit now for EDF as it doesn’t have much potential for self generation. What happens if they get held to ramsom by the French? Being dependent on a foreign supplier is not a good idea as far as I am concerned.
Not having another option is not a good option either, when is the JCRA going to look into this and demand competition in the market place like they have in the teleco market? What’s good for one is good enough for the other isn’t it?
Futures are a good method for protecting against fluctuations in energy markets especially in volatile times like we have at present.
I also don’t understand the need for part of the JEC to be in private hands. It should all be owned by the States to ensure the States get all profits above what is needed for running costs coming back into the States coffers. Lining private individuals pockets isn’t a good idea as far as I am concerned.
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“I also don’t understand the need for part of the JEC to be in private hands. ”
I believe that is essential in order to ensure that the Chairman of the company gets an OBE. It’s something to do with “accountability”, according to my New Labour guide to how to do everything really well (2005 edition).
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Mindful of the comments raised about the role of the JEC, consider the following:-
We could do away with the JEC and just buy our electricity direct from EDF. EDF would then bill us in EURO’s, thus as customers, we would bear the exchange difference ourselves, and have no one to blame when things appear to go wrong. If there were a problem with the under sea cables, we would be left in the dark.
As matters currently stand, the JEC ensure that we virtually always have electricity, maintaining a Power Station as full back up if there is a problem with the under sea links. Maintaining such a power station, which for most of the time is not used to its full capacity, is an ennormous expense, but one that is fully justified.
While I accept that current exchange rates, and the apparent forward purchase of electricity by the JEC has had an effect on our bills, we cannot have the best of both worlds, mindful that we are an island.
If people really feel electricity is too expensive, try generating it yourself ! Just ask residents of Sark and Alderney how much they pay for their electricity which is produced locally and you will soon realise that for an island, we get a pretty good deal financially, along with reliability of supply !
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Warren J, surely EDF bill the JEC in Euros not pounds, so they could easily bill customers direct in pounds equivalent if they wanted to? When we end up in the in the Euro this wouldn’t be an issue anymore.
The owner is responsible for maintaining the network.
What is the point in having your own generation system if you don’t use it? I believe in being self sufficient and beholdent to no one, or you risk being held to ransome. Also being dependent on exchange rates is another issue as we have found out to our cost lately.
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#33 So it’s a standard option. Very interesting. I still wonder which way they hedged!
#36 Warren
I agree completely. Why would a French electricity company bother providing for little Jersey? Makes no sense.
However, a 30 per cent increased in dividends paid is very big, particularly in the current climate. The company’s profit has also increased dramatically as well, though this may relate to zero/ten. JEC are in a monopoly position and this needs looking at.
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