Q&A: Standby Charge
What is the Standby Charge?
The Standby Charge covers a fair share of Transmission and Distribution network costs and standby power capacity (such as that provided by La Collette Power Station) for those Commercial customers who generate their own electricity but require backup services from Jersey Electricity’s grid on standby for when they are unable to generate sufficient power to support their operational needs.
Although these customers consume fewer units from JE (due to their own on-site generation), their peak demand remains the same because their embedded generation cannot be guaranteed to be operating all of the time. Maintaining this standby service incurs costs which are not recouped in unit sales as they are normally and this is why a Standby Charge is levied. Failing to recover these costs will lead to other customers covering a disproportionate share of them, leading to higher electricity prices.
Doesn’t the Daily Service Charge cover network costs?
No. The Daily Service Charge covers energy support services such as metering, billing, Customer Care and other energy support services. The unit cost of electricity covers the cost of the electricity itself, whether imported from France or generated here, and the infrastructure and network costs associated with bringing it to your premise.
Are you just trying to make money out of customers who need less of your electricity?
No. If those Commercial customers with embedded generation, who require backup services and power from the grid, did not contribute a fair share of the fixed costs associated with those services, the burden would fall on all other customers to meet them. We believe it is unfair to expect customers who do not have embedded generation (of which certain renewable generators are an example), or who cannot afford to install it, to have to bear the cost of maintaining an electricity network on behalf of those customers who do have embedded generation. In effect, subsidising those with embedded generation.
When will the Standby Charge come into effect?
Jersey Electricity has twice deferred the implementation of the Standby Charge until the completion of a States-of-Jersey-commissioned independent review of the charge. Now complete, the review, by UK Economic Consultants NERA, concluded that JE’s proposed charge of £3.25 per kWp per month was, if anything, low, calculating a range of charges between £3.22/kWp/month and £5.48/kWp/month depending on the type of EmG and self-consumption assumptions used.
We will therefore be introducing the charge, for installations up to 50kWp, as proposed of £3.25/kWp/month (incl GST) (£3.10 excl GST) for Commercial embedded generators specifically with solar PV connected in parallel with Jersey Electricity’s network from 1 May 2019. Existing systems at that date will be 'grandfathered' and exempt from the charge until change of ownership/facility upgrade.
Installations above 50kWp will be assessed and charged on a case-by-case basis on application, as they will require bespoke connections into the grid.
What about companies that have already installed EmGs or are about to?
Commercial solar PV systems installed and in-service before 1 May 2019 will be ‘grandfathered’ and will not be subject to the charge until change of ownership, facility upgrade or asset replacement.
Why won’t this charge apply to all existing Commercial customers with embedded generation?
We didn’t feel it was correct to retrospectively charge existing Commercial customers who did not pay an availability charge before 1 May 2019, as they would have used the historic tariff information when making their initial decision to install embedded generation.
Why will existing installations become subject to the charge if the property changes hands?
New customers will be advised of the Buy Back Tariff and Standby Charge as they currently stand when they apply to take over a property as per our existing processes for all new customers.
What impact will this have on a community scheme (as described in the Energy Plan)?
This will depend on the nature of the project. Once clear, JE can assess impact and come to a decision that is fair to everyone.
What will happen to the money raised by the Standby Charge?
This is not a money raising exercise. The Standby Charge is set to ensure everyone pays their fair share of network maintenance costs and help ensure tariff stability. The income raised will go towards funding network infrastructure on a sustainable basis.
Will the Standby Charge apply to Domestic customers with PV installations for example?
We currently have no plans to charge Domestic customers for embedded generation, such as Solar PV, which are generally 6kWp or less. However, we will keep the situation under review.
How do you decide what is Domestic and what is Commercial?
Domestic or Commercial installations are determined by their current designation on Jersey Electricity’s Customer Database, however, the Company reserves the right to apply the Standby Charge for installations that clearly fall within the bounds of commercial scale whatever the customer/premise designation.
Doesn’t local generation such as PV improve security of supply?
A typical PV or renewable installation does not provide any material benefit in terms of security of supply. Such installations will not lead Jersey Electricity to removing standby generation off the grid system and therefore will not lead to lower security costs. For example, JE has peak demand on its system at around 9.30pm on a dark, winter evening and therefore solar PV will not assist security of supply, as it cannot generate at times when demand is highest on the system. Similarly, wind generation is also intermittent and cannot be relied up during these peak winter demand periods.
In the UK, for example solar PV is essentially accorded no security of supply value by either Ofgem or National Grid.
This is not helping to support the States’ position on reducing the Island’s carbon emissions?
JE’s importation strategy has been instrumental in reducing Jersey’s overall carbon emissions by around 40% over the last 25 years. Electricity supply in Jersey is now less than one tenth of the carbon intensity of the UK electricity grid and we believe it may become even lower in the future.
Subsidies for renewable energy have been offered by governments in many countries, including the UK, to incentivise the decarbonisation of their electricity grids – though these are now rapidly being withdrawn. Jersey has already virtually decarbonised its electricity system to such low levels that the provision of costly, artificial subsidies would have little effect, if any, on Jersey’s carbon emissions.
Replacing imported low carbon electricity with embedded generated electricity will not materially reduce your carbon profile. The opportunity for the Island to reduce its carbon emissions really lies in fuel switching and reducing its dependence upon the use of hydro carbon-based energy sources. Having said this, Jersey Electricity is willing to connect embedded generators as long as this is done on terms that are fair and equitable to all customers.
A report published by the States of Jersey AEA Ricardo*1 ‘Developing an approach to Domestic Energy Efficiency Retrofit in Jersey’ noted that:-
‘In order to determine in what areas of the economy capacity may need to increase, it is necessary to understand which measures are most likely to mitigate carbon emissions, reduce fuel poverty and contribute to energy security on the Island.
‘Jersey has a low-carbon electricity supply (from predominantly nuclear generation in France) so a switch from gas or oil to electric heating will result in significant carbon savings.
‘As Jersey has low-carbon electricity supply, a change from electrical resistance heating to an Air Source Heat Pump (ASHP) will reduce emissions by 2/3 (based on a Coefficient of Performance of 3 for ASHPs) but starting from a low initial level. Reductions will be much greater when switching from oil or LPG to an ASHP. The order could change if ranked instead by emissions, or by cost.’
Put simply, leaving your bicycle at home and walking to work will not make any difference; you are already doing a low carbon activity.
How does this link with JE’s Social and Environmental Responsibility?
Jersey Electricity takes environmental issues very seriously and already imports almost one third of its annual energy [c 200m units] from certified hydro-electricity sources, which supports Jersey’s Energy Plan and carbon reduction targets; and has done so for many years. Jersey Electricity has invested significantly over the last 30 years, and continues to invest in providing affordable, low carbon energy to all its customers, benefiting the whole community.
What energy saving measures should I consider investing in?
If you are already running an all-electric home, you are running a low carbon home.
There are, however, many technologies available, including Wind, Micro CHP, PV, ASHP, GSHP, Solar Thermal, Solar PV etc. Which is best for you depends on your personal circumstances but in a report published by the States of Jersey AEA Ricardo*1 ‘Developing an approach to Domestic Energy Efficiency Retrofit in Jersey’ noted that:-
‘Using our experience of retrofit and applying this to the Jersey context, we estimate that there are seven key measures which could deliver substantial savings in space heating demand and these are ranked in order of energy saved.
1. Cavity wall insulation where missing, where appropriate
2. Limited solid wall insulation, where appropriate
3. Loft insulation - installation or upgrade (if below 100mm) as needed to remaining properties
4. Window upgrade
5. Replacement of hydrocarbon boilers with air source heat pumps or electrical resistance heating
6. Replacement of electrical resistance heating with air source heat pumps
7. Heating control upgrade
In all instances we recommend you seek professional help and guidance before making a decision.