States Tenants: Gas Utility Charges Increase

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A decision made 17 May 2012:

Decision Reference: MD-H-2012-0043
Decision Summary Title :	DS - Increase in Gas Heating and Hot Water Charges to States Tenants – July 2012		Date of Decision Summary:	10th May 2012
Decision Summary Author:	Finance Director		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:
Written Report Title :	WR - Increase in Gas Heating and Hot Water Charges to States Tenants – July 2012		Date of Written Report:	10th May 2012
Written Report Author:	Senior Management Accountant		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Increase in Gas Heating and Hot Water Charges to States Tenants – July 2012
Decision(s): The Minister, approved the increase in charges for gas heating and hot water supply to States tenants by 5.9% with effect from 2nd July 2012.
Resource Implications: Financial: Increase in revenue of £37.00 per week which will be offset by equivalent increases in the cost of supply.
Action required: Finance Director to notify the Treasurer of the States and notify affected tenants and Income Support of the changes.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

States Tenants: Gas Utility Charges Increase - July 2012

Date of report 10th May 2012

REPORT FOR THE MINISTER FOR HOUSING

Increase in Gas Heating and Hot Water Charges to States Tenants

Purpose

To consider an increase in gas heating and hot water charges to States tenants.

Background

The Housing Department currently supplies 158 homes with heating and hot water generated by gas. The Department pays Jersey Gas direct for the service and the cost is recharged to tenants by way of a weekly charge to their rent account.

Jersey Gas has recently announced that it is to increase its charges for supply from 9.9 pence per unit to 10.48 pence per unit from the 10th May 2012. An increase of 5.9%. In order to ensure full recovery of the cost of supply it is necessary to increase the cost to tenants by a similar amount.

Of note at this time is the Department’s heating replacement programme which will, within the next four months, deliver the conversion of 134 of these units to electric heating at Cherry Orchard Court, St Mark’s Gate, Le Geyt Apartments, Chestnut Court, Maple Grove and Pine Court. It is proposed therefore not to increase the charges for those units in particular where the heating is to be replaced and these tenants will be written to to confirm this.

The table below sets out the impact of this increase by property type for the units which will remain on gas supply:

Property Type	Number of Bedrooms	Existing Charge (exc GST)	Increase at 5.9%	New Charge (exc GST)	Number of Units
Bungalow	2	23.77	1.40	25.17	1
House	2	26.16	1.54	27.70	1
Maisonette	3	26.16	1.54	27.70	22

Review of Oil Charges

Charges to tenants for oil heating was last changed in April 2011 and an increase of 22.8% was made. Since that time, whilst the market price for oil has fluctuated moderately, the price has changed very little overall. The principal exposure to oil costs is the heating system at Clos Gosset. This system will be replaced with electric heating as part of the current refurbishment programme. This, coupled with the heating replacement programme will reduce the number of oil fired units to 3 sites in the near future.

It is therefore not proposed to increase charges for oil heating at this time.

Compliance with Financial Directions

Financial Direction 4.1 requires that any increases in charges should normally be limited to 2.5% and increases above this level must ordinarily be referred to the Treasury and Resources Minister for approval. However, the Treasurer of the States, under delegated authority from the Treasury & Resources Minister, has granted an exemption to this requirement for approval where the increase in charges made by the Department is directly offset by an increase in the costs in supply of the utility service. (TR-2010-DD24). The Department will however inform the Treasury and Resources Department of this increase.

Recommendations

That the Minister;-

approves the increase in weekly gas heating and hot water charges to States tenants by 5.9% with effect from 2nd July 2012.

Housing Department

Report Prepared By: -

Jason English

Senior Management Accountant

……………………………… Date: 2012

Report Checked By: -

J C Hamon

Finance Director

……..………………………. Date: 2012

Authorised By: -

Ian Gallichan

Chief Officer

………………………………. Date 2012