Jersey Electricity : Annual Report – 2022

NON-EXECUTIVE DIRECTORS

Phil Austin

MBE, FCIB, FCMI (Chair)

Alan Bryce

MSc, CEng, FIET

Wendy Dorman

BA, ACA

Tony Taylor

BSc (Hons)

Amanda Iceton

BA (Hons)

Kayte O'Neill

BA (Hons)

EXECUTIVE DIRECTORS

Christopher Ambler

BA, MEng, CDipAF,

CEng, MIMechE, MBA

(Chief Executive)

Martin Magee

CA (Finance)

SECRETARY

Andrew Welsby

BA, MA, FCIPD

REGISTERED OFFICE

Queen's Road, St. Helier, Jersey

PLACE OF INCORPORATION

Both Jersey Electricity plc ('the Company') and Jersey Deep Freeze Limited (together 'the Group') are incorporated in Jersey.

AUDITORS

PricewaterhouseCoopers CI LLP,

37 Esplanade, St. Helier, Jersey, JE1 4XA

BANKERS

Royal Bank of Scotland International Limited, 71 Bath Street, St. Helier, Jersey

BROKERS

Canaccord Genuity Wealth Management, PO Box 3, 37 The Esplanade, St. Helier, Jersey

REGISTRAR

Computershare Investor

Services (Jersey) Limited,

13 Castle Street, St. Helier, Jersey

How we performed in 2022

Our Key Performance Indicators (KPIs) are quantifiable measurements which help gauge overall performance and help make informed decisions about our operations and strategy. Detail of why we view these items as key indicators of performance is contained in the relevant sections within this Annual Report.

2021 2020

118.6 111.7

19.1 14.8

16.9 16.1

639 619

2 1

5.9 6.8

5 5

23 24

78 77

8.1 8.3

Customers

We put customers at the heart of our business, giving them choice, control and value for money in a transparent and trusted way.

Environment

We support the Government of Jersey's Carbon Neutral Roadmap by growing electricity's share of the energy market, reducing carbon emissions, helping to conserve resources and protecting the environment.

Lifestyle

We aim to enhance the lifestyle of Islanders and power the economy by providing innovative, low-carbon energy services and solutions.

Our People

We aim to be an employer of choice in Jersey, where employees are engaged, supported and developed.

Technology

We aim to be leaders in the application of technology, enhancing efficiencies, unlocking new services and digitally enabling our employees and our customers.

Investors

We provide fair returns to our investors over the medium to long-term.

Partnerships

We aim to be the partner of choice for the Government of Jersey and the Island's parishes, supporting all their energy needs.

Safety

We do everything safely and responsibly or not at all - nothing is more important than the safety of the public, our customers and our people.

Reliability

We are trustworthy, dependable and reliable, delivering on our commitments and always there when our customers need us.

Customer Focus

We listen to our customers and seek to understand and respond to their needs, treating them the way we would wish to be treated, with respect and honesty.

Teamwork

We value diversity and respect and value our colleagues as individuals. We believe we are stronger as a team, leading to better solutions and a more enjoyable and rewarding work life.

Excellence

We continuously strive to work in a way that is both innovative and simple to deliver cost effective solutions.

Responsibility

We accept responsibility for everything we do, safeguarding the natural environment and the local community, as well as the interests of all our customers and people.

Develop e-mobility and EV charging solutions to encourage cleaner, more efficient, electric transport.

Provide integrated services 'beyond the meter' that put customers at the heart of the energy system.

Our strategies and work streams will enable us to achieve our Vision. They are also aligned with,

and are fully supportive of the Government of Jersey's net-zero carbon emissions ambitions.

Lead in the application of technology to benefit customers by providing new and improved services and driving efficiency in our business.

Create value for all stakeholders, by providing fair pricing for customers and fair returns for shareholders.

Deliver a well-invested network and a highly skilled, diverse and engaged workforce committed to a zero-carbon future.

The turmoil that beset international energy markets in late 2021 has intensified further due to the escalating conflict between Russia and Ukraine, leading to a previously unthinkable global energy crisis. This has presented major new challenges to energy companies post the pandemic, sending wholesale prices soaring and threatening supply security throughout Europe. Jersey Electricity is not immune

to these challenges, but we have shown resilience, returning a strong Group performance and protecting our customers from the huge retail price rises seen elsewhere, without Government intervention.

Performance

Group revenue for the year at £117.4m was 1% lower than last year and profit before tax was £10.6m against £19.1m in 2021. If the non-cash upside from the revaluation of investment properties is excluded in both years, the underlying year-on-year profit before tax is £9.6m against £13.0m in 2021, a fall of 26%.

This year's financial performance reflects the effects of COVID-19 post the pandemic. Coupled with a mild winter, a return to more normal patterns of work and behaviour has reduced demand, with both unit volume sales in Energy, and

£117.4m

Group revenue 2022

Retail revenues, down on last year as electricity consumption and Powerhouse product sales returned to historical levels. The Board has recommended a final dividend for the year of 10.80p, a 6% rise on the previous year, payable on 23 March 2023. Our target return on assets continues to be 6%-7% over the long term and was 4.2% this year, but 6.2% on a rolling five-year basis.

Energy markets

Elsewhere, the scale of the energy crisis has prompted Governments across Europe to intervene, each in their own way, to mitigate the impact of the rising prices on their citizens. In the UK, such Government intervention averted a proposed 80% year-on-year increase in energy prices in October when Ofgem was due to raise the regulated price cap to £3,549. The new Energy Price Guarantee now limits this cap to £2,500 a year until April 2023 when the cap will be increased to £3,000, prompting a further 20% price rise.

Although our hedging and risk mitigation policies have so far sheltered Jersey customers from such material price increases, we are not immune to these market forces. We therefore implemented a 4% tariff rise from 1 January 2022 and a further 5% increase from 1 July 2022, at which time we announced a further 5% tariff increase effective from 1 January 2023 to give our customers some degree of certainty for the coming winter period.