Interim Management Statement

RNS Number : 0593H

Jersey Electricity PLC

06 July 2012

 

Jersey Electricity plc                                                                                

Interim Management Statement

Jersey Electricity plc is today publishing an Interim Management Statement as required by the revised UK Listing Authority's Disclosure and Transparency rules, relating to the period from 1 April 2012 to the date of issue of this announcement.

In the quarter to 30 June 2012, unit sales of electricity in our Energy business were 6% higher than the same period last year.  This was mainly as a result of mild weather last year as April 2011 was the warmest in Jersey since 1894. Unit sales for the month of July to date are at a similar level to those experienced in 2011.

In the nine month period to 30 June 2012 unit sales of electricity were 2% lower than the equivalent period last year and electricity revenues in the Energy business were on a par with the previous year.

Our other business units at a total level, traded behind the corresponding financial position in the last financial year in both the last quarter and the year to date excluding non-recurring revenues in the prior year. As indicated when we issued our half-year results the Retail operations continue to experience challenging trading conditions due to the downturn in the wider general retail marketplace in Jersey.   

In our Directors' Statement at the half year we indicated that on 29 April 2012 an electrical fault occurred on a section of the Channel Islands Electricity Grid between Guernsey and Jersey. The circuit remains out of service and ABB have been appointed as the contractor to replace a portion of the submarine cable. This is expected to be completed in early August. It is anticipated that the insurance arrangements that are in place for such events will cover the majority of costs involved. However there is a risk that adverse weather could delay the anticipated schedule of works, resulting in the ship involved in the repair being mobilised for longer than expected.

On 17 June an unrelated incident occurred with the two submarine cables that connect Jersey with France. The younger submarine cable installed in 2000 is back in service.  The older of the two cables, which was installed in 1984, has been under investigation and remains out of service due to an electrical fault. The ability to repair this cable is being examined with the manufacturers. However as it is 28 years old, it may not be technically possible or economically viable to do this. It had been anticipated that this cable was nearing its end of life and as indicated in our previous Annual Reports, we are 8 years into a major project to install a third submarine cable to France. Formal planning permission is expected in September from the French authorities which should lead to an in service date of 2015. The impact of this latest incident is that over the period to 2015, we will need to generate more electricity on-island using oil, rather than by importation, than previously anticipated.  However we still expect to fulfil the majority of the electricity needs of Jersey from lower cost, low-carbon sources in France. There will also be associated incremental costs incurred between now and the financial year end.       

Our electricity imports and foreign exchange requirements are fully hedged for the remainder of this financial year. In addition, a significant proportion of the forward imported electricity requirements for the following two calendar years have been price fixed. However due to the restriction on the levels of imported power as a result of the unexpected premature loss of one of the Jersey-France interconnectors, it is likely that customer tariffs will need to rise to cover the additional incremental cost of generating a proportion of requirements with more expensive oil. The scale and timing of such a tariff increase is still fluid as it is subject to clarification of a number of uncertainties that still exist. We expect to be able to revert to our normal operational regime, based on virtually full importation, once the third submarine cable has been commissioned.     

The project to install and commission two diesel engines, which commenced last year, is scheduled to be completed by early next year at a cost of around £10m of which around £7m has been spent to date. The engines replace two units within our existing generating fleet which have recently come to the end of their useful lives and will provide more fuel efficient and resilient generation capacity. This project is continuing to make good progress. 

The cash balance at the end of June 2012 was £16m being £8m lower than the level at the last financial year end. It is anticipated that such cash resources will be absorbed in the delivery of the planned capital expenditure programme on electricity infrastructure in the short to medium term, particularly the submarine cable project at around a cost of £60m. Our balance sheet remains in a similar financial state to that issued at our half year and there have been no significant changes in the overall financial position of Jersey Electricity plc since the issue of our Interim Report for the six month period ended 31 March 2012 other than those highlighted above. 

6 July 2012

For further information, please contact:

Chris Ambler, Chief Executive     Tel: [phone]

Martin Magee, Finance Director  Tel: [phone]

 

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