Reform support for Jersey Gas takeover

Monday 11 May 2020

Reform Jersey politicians have voiced support for a takeover of Jersey Gas, as pressure continues to pile on the privately-owned utility company after it hiked prices by 6.5% in the middle of a health crisis.

The comments from Minister for Children and Housing, Senator Sam Mézec, and Deputy Geoff Southern come amid a standoff between the energy provider and the Government.

Jersey Gas says it should be granted access to the covid-19 payroll co-funding scheme because the health crisis has left it in financial distress, but the Government won’t release any financial support until it gets to see the parent company’s accounts.

Pictured: Jersey Gas is refusing to disclose its parent company's accounts.

With neither party budging, Jersey Gas said it had “no choice” but to raise prices for customers – a move that led Economic Development Minister Senator Lyndon Farnham to threaten that the Government would use its legal powers to intervene if necessary. 

The powers allow it to force price changes, take shares in the company or even take it over.

In a post ‘liked’ by nearly 200 people, Senator Mézec said he would support the idea of a takeover.

“There's a lot of talk at the moment about Jersey Gas, because of the awful way they have raised their prices during a public health crisis and pretty much refused to co-operate with the government which is genuinely wanting to help,” he wrote.

He continued: "I suggested that this was inevitable because of their ownership structure, given they are owned by an off-island venture fund and have a primary duty to serve their share holders, not the public of Jersey. Unlike Jersey Electricity, Post, Telecoms and Water which are all either government-owned, or majority government-owned, and so have a primary duty to serve the public of Jersey.

“So maybe if we want to get a better deal for the public from Jersey Gas we should change to the ownership structure which is proven to work best. Whether you agree or disagree with me on that, it's not exactly an outrageous argument to make.”

Fellow Reform Jersey member Deputy Geoff Southern told Express that the party believed such a move to be “the way forward for utilities”.

However, he said that this would be a discussion to have in the longer term.

Despite this, he still wants States Members to vote in favour of a proposal he has put forward to support Jersey Gas through the “short-term crisis” by legally obliging the government to grant it access to the co-funded payroll scheme.

Pictured: Deputy Southern is hoping to secure support for Jersey Gas' workers.

Deputy Southern described Jersey Gas as a business that appeared to have "fallen through the cracks" in a report accompanying his proposals, which were published before the dispute erupted. 

He has since slightly amended his plan, asking the Government to provide alternative financial assistance to Jersey Gas if it can’t be included in the payroll scheme in a bid to “spread the range of options”.  

Deputy Southern says there is no reason Jersey Gas shouldn’t be included given that they have lost 50% sales, provided the “full books of the company” and are having difficulty paying their workers. 

“My view is that the list [of companies included in the first phase of the scheme] was a fully arbitrary list,” he said. “Phase two had more criteria. Why can’t we let Jersey Gas in the scheme to support the workers and their wages. It will mean the company deals with its short-term crisis and is in a better situation to meet a long-term solution.” 

The Deputy is concerned that, if Jersey Gas cannot get support, they might have to lay-off some of their 50 employees, including some of their skilled workers.  

Pictured: "We want to deal with a crisis for 35 skilled workers," Deputy Southern said.

“Jersey Gas has given plenty of information on their financial circumstances,” he said.

“We are not talking about the alternatives, they are long-term solutions. If you look at green energies, for example, the ambition would be to phase off gas but that would have to be done very, very carefully after a number of years.

“We want to deal with a crisis for 35 skilled workers who are important and might become critical for all the gas users. We want to deal with that now.”

Supporting Jersey Gas would put the pressure of the company, Deputy Southern said, and help resolve the issues created by the recent price increase.

However, Economic Development Minister Senator Lyndon Farnham is urging his fellow politicians to vote against the idea.

Pictured: Senator Farnham said he will not support the proposals.

In comments published last week, he said unable he was unable to support it given that discussions are still ongoing between Jersey Gas and the Government. 

“Officers are continuing to work with Jersey Gas to assess the options for helping the company and its staff to help limit the affects of the Covid-19 period, secure the supply of gas for Jersey residents and protect jobs,” he wrote.

“Material detriment is different to financial need. Not all businesses that suffer material detriment require Government support to continue to operate. Jersey Gas is required to demonstrate financial need in order to be considered for financial support through an alternative source, such as the Business Disruption Loan Guarantee Scheme or the Jersey Covid-19 Special Situations Fund (formerly the Jersey Recovery Fund), which may have scope to provide more comprehensive support than the payroll scheme alone. They could for instance, give access to more funding over a longer period, if appropriate.”

The Minister went on to remind politicians of the Government’s powers under the Jersey Gas Company (Jersey) Law 1989 to protect consumers against high price increases. 

Pictured: The law cited by the Economic Development Minister allows the government to force price changes.

He added, however: “We recognise that Jersey Gas is a critical infrastructure provider, and we remain open to providing comprehensive assistance.

"We urge Jersey Gas to work with us, in the interests of their local customers, their employees and their business, to find a solution to their current challenges, ideally through the Special Situations Fund.”

Deputy Southern's plan is scheduled for debate by States Members tomorrow.