Government of Jersey

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A decision made (26/02/2009) regarding: Service Charges paid by States Tenants.

Decision Reference: MD-H-2009-0015
Decision Summary Title :	DS – Proposal for Changes to Service Charge Levels		Date of Decision Summary:	30th January 2009
Decision Summary Author:	Carl Mavity		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Proposal for Changes to States Tenants Service Charge Levels with effect from 6th April 2009		Date of Written Report:	22nd January 2009
Written Report Author:	Carl Mavity		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: To approve changes to the level of service charges paid by States Tenants
Decision(s): The Minister rescinded MD-H-2009-0011 and approved the following changes to service charges, subject to the approval of the Minister for Treasury & Resources:- An increase of 9% in the charge for electricity based heating and hot water An increase of 2.5% in the charge for Water A reduction of 5% in the charge levied for heating and hot water to tenants at 1-84 Convent Court A reduction of 5% in the charges levied for Gas and Oil Heating and Hot Water The cancellation of the TV aerial maintenance charge for 3,246 tenants representing a saving of £24.96 per tenant per annum All changes to take effect from 6th April 2009.
Reason(s) for Decision: To ensure that charges accurately reflect the actual costs associated with providing the services.
Resource Implications: Financial: Nil – Impact of changes should maintain cost neutrality for revenue budget
Action required: Finance Director to notify Treasury & Resources to ensure approval is granted under Financial Direction 4.1 & Social Security Department in respect of Impact on Income Support
Signature:		Position: MINISTER
Date Signed:		Date of Decision (If different from Date Signed):

States Tenants - Service Charges.

Date of Report:- 22 nd January 2009

REPORT FOR THE HOUSING MINISTER

CHANGES TO SERVICE CHARGE LEVELS FOR STATES TENANTS

Purpose of the Report

To request approval for changes to the levels of charges to States Tenants in the following areas:-

Heating, Hot Water

Mains Water Supply

TV Aerial Charges

all to take effect from 6th April 2009.

Background

The cost of providing heating and hot water and mains water to tenants was last reviewed in May 2008. MD-H-2008-0029 refers.

At that time, the charge for Gas and Oil heating was increased by some 18.5% and water was increased by 3.9% all exclusive of GST. The cost of electric heating was not increased and reflected the relative price stability offered by the JEC at that time.

PRESENT POSITION

The JEC have just implemented a 24% increase in electricity charges.

Jersey Water will increase water charges with effect from 1st April 2009 by 2.5% for unmetered water.

The World energy markets have seen the price of crude oil settle back to around $40 a barrel, in all probability an unsustainably low price and this is having an effect on the cost of heating Oil and Liquid Petroleum Gas (LPG) which is the form of gas sold for domestic heating use by Jersey Gas. Jersey Gas reduced its price for gas by 26% on 18th December 2008.

The refurbishment programme set out in the Social Housing Property Plan 2007 – 2016 is in full flow with projects such as 1-48 Clos du Fort having been completed, The Cedars, La Grande Piece and Clos de Roncier in progress and Clos de Quennevais, 1-21 Le Geyt and La Carriere due to commence shortly. All of these schemes feature measures aimed at energy efficiency, both to minimize the impact of the homes on the environment but also to make running the homes as cost effective for tenants as possible.

One area of the programme which has not advanced as planned was the proposed demolition of Convent Court High Rise which has had to be moved back in the programme as a consequence of the need to decant Ann Court for its proposed redevelopment as part of the Millennium Town Park project. Convent Court has a number of problems associated with poor thermal efficiency and it is clear that the existing heating systems are finding it increasingly difficult to provide consistently comfortable living temperatures. A programme of window servicing and draught proofing will commence this year to try to redress this position in the short term; however, presently there is some merit in the argument that the tenants in that building are not getting reasonable value for money in respect of the heating charge which they pay.

Extensive financial modelling has been undertaken to assess the impact of the changing cost of energy and likely rate of consumption in 2009, given the improvements being made to the stock in order to assess the correct level of charges to be levied on tenants.

ELECTRICITY

Whilst the cost of electricity has increased by 24%, modelling suggests that improvements in the thermal efficiency of the stock together with a review of tariff structures with the JEC, means that it will not be necessary to pass on the full 24% increase to tenants at this time. Financial modelling indicates that an increase of 9% will be sufficient to ensure that expenditure is fully recovered.

WATER

The 2.5% increase in water charge being imposed by Jersey Water will need to be passed on to tenants in full. The Department already receives a discount from Jersey Water on the price of unmetered water and this has a consequential benefit for tenants.

OIL & GAS

As has been mentioned the cost of crude oil and therefore heating gas and oil has been coming down from its all time high price in the middle of 2008. Financial modelling suggests that as a result the cost of providing heating and hot water fuelled from these commodities will reduce in 2009 – subject to their being no significant rise in costs during the year. Therefore a small reduction of 5% can be sustained in the charge for Oil & Gas Heating and Hot Water.

TV AERIAL CHARGE

3,246 tenants have hitherto been provided with access to TV aerial services by the Department who have in turn had an arrangement with Newtel Cable to provide terrestrial and premium TV services to homes. The cost of providing and maintaining this service has been paid for by a small charge of up to 48 pence per week levied on those tenants.

TV technology is changing rapidly and it was recently announced that the Island will benefit from Digital TV in 2010. It is no longer considered necessary for the Department to continue to provide TV services to all those tenants and starting with the departments 1,147 Houses and Bungalows, tenants will be given far more freedom to decide for themselves where they choose to get their TV service. This will undoubtedly include access to the cable network, SKY TV, FreeSat and eventually Digital FreeView in 2010.

The cost of maintaining the existing network is negligible and it is no longer considered necessary, cost effective or appropriate to continue collecting such a small charge from tenants.

Impact of the proposed changes

All tenants will see a 2.5% increase in their water charge

1,341 tenants will see a 9% increase in their electric heating and hot water charge.

84 tenants at Convent Court will see a 5% reduction in their heating and Hot water charge

1,287 tenants will see a 5% reduction in their Gas and Oil Heating Charge

3,246 tenants will see a saving of £24.96 per year through the cancellation of the TV aerial maintenance charge.

All of these changes are set out below.

HEATING TYPE	UNIT SIZE	TENANTS SERVED	PRESENT WEEKLY CHARGE	NEW WEEKLY CHARGE	PRESENT WATER CHARGE PER WEEK	NEW WATER CHARGE
ELECTRICITY	BEDSIT	201	£4.62	£5.04	£4.00	£4.10
	1 BEDROOM FLAT	796	£5.72	£6.23	£4.26	£4.37
	2 BEDROOM FLAT	397	£6.31	£6.88	£4.59	£4.70
	1 BEDROOM HOUSE/MAISONETTE	1	£5.72	£6.23	£4.26	£4.37
	2 BEDROOM MAISONETTE	26	£6.31	£6.88	£4.59	£4.70
	2 BEDROOM MAISONETTE	6	£10.96	£11.95	£4.59	£4.70
	3 BEDROOM MAIS/FLAT	3	£10.96	£11.95	£5.25	£5.38
	3 BEDROOM MAIS/FLAT	1	£6.31	£6.88	£5.25	£5.38

OIL & GAS	BEDSIT	8	£10.32	£9.70	£4.00	£4.10
	1 BEDROOM FLAT	389	£13.40	£12.60	£4.26	£4.37
	2 BEDROOM FLAT	418	£15.44	£14.51	£4.59	£4.70
	3 BEDROOM FLAT	93	£16.48	£15.49	£5.25	£5.38
	2 BEDROOM HOUSE	90	16.48	15.49	£4.59	£4.70
	3 BEDROOM HOUSE	252	£17.53	£16.48	£5.25	£5.38
	4 BEDROOM HOUSE	5	£18.56	£17.45	£6.10	£6.25

NO HEATING _ WATER ONLY	BEDSIT	92			£4.00	£4.10
	1 BEDROOM FLAT	381			£4.26	£4.37
	2 BEDROOM FLAT	382			£4.59	£4.70
	3 BEDROOM FLAT	29			£5.25	£5.38
	2 BEDROOM HOUSE	197			£4.59	£4.70
	3 BEDROOM HOUSE	450			£5.25	£5.38
	4 BEDROOM HOUSE	86			£6.10	£6.25
	5 BEDROOM HOUSE	8			£7.18	£7.36
	6+ BEDROOM HOUSE	3			£7.18	£7.36

FOR THE RESIDENTS OF 1-84 CONVENT COURT THE IMPACT WILL BE

HEATING TYPE	UNIT SIZE	TENANTS SERVED	PRESENT WEEKLY CHARGE	NEW WEEKLY CHARGE	PRESENT WATER CHARGE PER WEEK	NEW WATER CHARGE
ELECTRICITY	BEDSIT	28	£4.62	£4.39	£4.00	£4.10
	1 BEDROOM FLAT	28	£5.72	£5.43	£4.26	£4.37
	2 BEDROOM FLAT	28	£6.31	£5.99	£4.59	£4.70

Financial Direction 4.1 sets out at paragraph 5.2 that increases in States Charges should normally be limited to 2.5% per annum with compelling cases to be subject to the prior approval of the Minister for Treasury & Resources. For that reason it will be necessary to request approval for the proposed changes prior to implementation.

All of these changes will have an impact on the calculation and payment of Income Support benefits and it is necessary to provide 6 weeks notice of the changes so that benefits can be recalculated and letters sent to all claimants in advance of changes taking effect.

In the interest of good customer service it is therefore proposed that the changes take effect from Monday 6th April 2009.

Recommendation

That the Minister approve the following changes to service charges, subject to the approval of the Minister for Treasury & Resources:-

An increase of 9% in the charge for electricity based heating and hot water

An increase of 2.5% in the charge for Water

A reduction of 5% in the charge levied for heating and hot water to tenants at 1-84 Convent Court

A reduction of 5% in the charges levied for Gas and Oil Heating and Hot Water

The cancellation of the TV aerial maintenance charge for 3,246 tenants representing a saving of £24.96 per tenant per annum