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Jersey Electricity (JEL)

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Monday 24 October, 2005

Jersey Electricity

Trading Statement

Jersey Electricity Company Limited
24 October 2005



JERSEY ELECTRICITY COMPANY LIMITED STATEMENT

24 October 2005


The Jersey Electricity Company Limited, has today issued a statement regarding
energy prices, a copy of which is attached. The pricing policy of the Jersey
Electricity Company, in common with most utilities, is to fully recover the
wholesale costs of energy from its customers.  However, it considers that
continuing strong growth in its share of the energy market remains best assured
by tariff restraint. It has chosen to absorb a substantial element of the
greatly increased cost of imported power from Europe, to which it will be
exposed when its three year, fixed price power purchasing agreement expires on
30 November, 2005.  As a consequence, profits in the year to 30 September, 2006
will be significantly reduced but are expected to fully recover during 2008.  In
view of the level of cover, the Company expects dividends will not be affected
by the forecast reduction in profits.


ENDS


Attached :  Jersey Electricity Company Limited Press Release


For further information, please contact Mike Liston, Chief Executive
(Tel: 01534 505320)



PRESS RELEASE


JERSEY ELECTRICITY WARNS STOCK EXCHANGE OF TWO-YEAR HIT TO PROFITS


The recent rise of 55 per cent in the cost of electricity imported from Europe
is to be largely absorbed by Jersey Electricity over the next two years.



The increased cost of power traded on the European electricity market will hit
Jersey Electricity immediately, when its three year fixed price contract with
Electricite de France (EDF) expires in December 2005.  However, the Company has
announced that it will hold prices at their present level until 1st January,
2006 and then limit the price increase to its customers to 9.7%.  It has also
pledged that despite continuing volatility in the world's energy markets there
will be no further electricity price increase next year.



In a formal notice to the London Stock Exchange today the Company discloses that
absorbing increased costs will significantly reduce profits in its electricity
supply business.



Mike Liston, Chief Executive of the Company - of which 62% is owned by the
States of Jersey - said that given the level of cover, dividends should not be
affected by the anticipated profit reduction. He added that the three-year
fixed-price contract with EDF which is coming to an end, had sheltered
electricity users in Jersey from the reality of chaos in the world's energy
markets during that period - oil and gas prices had tripled and this had
affected the price of electricity traded on the European wholesale markets.
Jersey Electricity imports nearly all its power from the European grid under the
umbrella of a long-term supply agreement with EDF.



Imported electricity is regarded as important from an environmental perspective
because of its high proportion of renewable energy which helps to reduce carbon
dioxide emissions. With gas and oil price rises far outpacing those of
electricity since 2000 - and with oil prices remaining particularly volatile -
it also makes sound economic sense.



Jersey Electricity's decision to absorb a substantial element of the cost hike
means that the increase of 9.7% will make electricity for the average household
£1 per week more expensive in 2006 than at present.  A similar increase can be
expected in 2007, but the Company hopes then to be able to restore its record
for not having increased its prices above inflation in any of the past 20 years.
Mr. Liston points out that household electricity prices in Jersey are currently
about 15% lower than the average across Europe and 7% lower than the UK average.



Addressing any concerns about the long-term effect of the impact on Company
profits, he said 'We invest on average about £10 million each year in order to
maintain the capability and reliability of the Island's electricity supply
system so our normal profit of around £6 million a year is about right to enable
us to manage that. We believe that we can afford to suffer a reduction to these
profits for the next two years without risking vital investment in
infrastructure.  And we can reassure our staff that this situation doesn't
threaten jobs - we've reduced our workforce by nearly half in the past decade
and we regard present manning levels as right for the business.'



ENDS



For further information, please contact Mike Liston, Chief Executive 
(Tel: 505320)







                      This information is provided by RNS
            The company news service from the London Stock Exchange