Date of Report:- 28 th October 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:-
Electric Heating and Hot Water
Gas Heating
to take effect from 4th January 2010.
Background
The cost of providing heating and hot water and mains water to tenants was last reviewed in January 2009. MD-H-2009-0015 refers.
At that time, the charge for Gas and Oil heating was decreased by 5% and water was increased by 2.5% all exclusive of GST. The cost of electric heating was also increased by 9% (except for 84 units at Convent Court, which, due to the condition of the building had their respective charges reduced by 5%).
Recent Price Changes
The JEC have recently announced a tariff reduction of 5.1% for the supply of electricity for the Winter Warmth scheme which provides heating and hot water to many of the Department’s tenants.
Jersey Gas has recently announced an increase in their tariff of 15% effective from the beginning of September 2009.
ELECTRICITY
1422 tenants currently receive their heating and hot water on the Winter Warmth sceme. The following table gives the current average charges and the revised charge with the proposed decrease of 5.1%:
Type of Accommodation | | Number of Bedrooms | | Current Average Price £ | | Change in Price £ (5.1%) | | Revised Average Price £ | | | | | | | | | | Bed-sit | | 0 | | 4.89 | | -0.25 | | 4.64 | | | | | | | | | | Flat | | 1 | | 6.3 | | -0.32 | | 5.98 | Flat | | 2 | | 7.02 | | -0.36 | | 6.66 | | | | | | | | | | Maisonette | 1 | | 6.23 | | -0.32 | | 5.91 | Maisonette | 2 | | 7.99 | | -0.41 | | 7.58 | Maisonette | 3 | | 10.68 | | -0.54 | | 10.14 |
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GAS
492 tenants currently receive their heating from gas systems. The following table gives the current average charges and the revised charge with the proposed increase of 15%:
Type of Accommodation | | Number of Bedrooms | | Current Average Price £ | | Change in Price £ (15%) | | Revised Average Price £ | | | | | | | | | | Bed-sit | | 0 | | 9.80 | | 1.47 | | 11.27 | Bungalow | | 2 | | 14.23 | | 2.13 | | 16.36 | | | | | | | | | | Flat | | 1 | | 12.73 | | 1.91 | | 14.64 | Flat | | 2 | | 14.67 | | 2.20 | | 16.87 | Flat | | 3 | | 15.66 | | 2.35 | | 18.01 | | | | | | | | | | House | | 2 | | 15.66 | | 2.35 | | 18.01 | House | | 3 | | 16.74 | | 2.51 | | 19.25 | House | | 4 | | 17.63 | | 2.64 | | 20.27 | | | | | | | | | | Maisonette | | 1 | | 12.73 | | 1.91 | | 14.64 | Maisonette | | 2 | | 14.67 | | 2.20 | | 16.87 | Maisonette | | 3 | | 15.66 | | 2.35 | | 18.01 |
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Impact of the proposed changes
1422 tenants will see a 5.1% decrease in their electric heating and hot water charge.
492 tenants will see a 15% increase in their Gas Heating Charge
All of these changes are set out below.
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 4th January 2010.
Recommendation
1 - That the Minister approve the following changes to service charges, subject to the approval of the Minister for Treasury & Resources:-
An decrease of 5.1% in the charge for electricity based heating and hot water
An increase of 15% in the charges levied for gas heating.
2 – That the Minister requests the consent of the Treasury and Resources Minister to permit future increases in charges above 2.5% where these are in line with increases imposed by the utility companies.
All changes to take effect from 4th January 2010.
REPORT DRAFTED BY:- ………………………………………….
Jason English, Senior Management Accountant
REPORT APPROVED BY:- ………………………………………...
John Hamon, Finance Director