Gas heating charge increase to States tenants

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A decision made 12 January 2010 regarding: Gas heating charge increase to States tenants.

Decision Reference: MD-H-2010-0002
Decision Summary Title :	DS – Changes to Gas Heating Charges to States Tenants in March 2010		Date of Decision Summary:	11th January 2010
Decision Summary Author:	John Hamon		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 :	Changes to Gas Heating Charges to States Tenants in March 2010		Date of Written Report:	11th January 2010
Written Report Author:	Jason English		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Utilities service charges paid by States Tenants - changes
Decision(s): The Minister approved the following changes to service charges, subject to the approval of the Minister for Treasury & Resources:- An increase of 5% in the charges levied for Gas Heating and Hot Water, to take effect from 1st March 2010.
Reason(s) for Decision: Jersey Gas has recently published an increase in the cost of supply of gas which is used to heat tenants’ homes. It is considered appropriate that this increase is passed on to the users of the heating service fuelled by gas, rather than being subsidised by the Department.
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 and to request the approval of the Minister for Treasury and Resources for the Department to pass on subsequent increases in excess of 2.5% where such increases are driven by changes to the prices levied by the utility companies. Finance Director to notify the Social Security Department in respect of the impact on Income Support.
Signature:		Position: ASSISTANT MINISTER
Date Signed:		Date of Decision (If different from Date Signed):

Gas heating charge increase to States tenants

Date of Report:- 11 th January 2010

REPORT FOR THE HOUSING MINISTER

CHANGES TO GAS HEATING CHARGES FOR STATES TENANTS IN MARCH 2010

Purpose of the Report

To request approval for an increase in the charges levied to States tenants for gas heating and hot water by 5% to take effect from 1st March 2010.

Background

The Jersey Gas Company Limited has notified the Housing Department that with effect from 20th January 2010 the tariff for gas supplied to heat 492 of the Department’s properties will increase by 5% to 7.16p per unit. This follows an announcement in 2009 of a then 15% increase in the gas tariff from the beginning of September 2009.

The Department recharges the utility costs for heating and hot water to its tenants with the last increase of 15% being applied to tenants’ rent accounts with effect from 4th January 2010.

The Housing Department is currently implementing a programme of transferring many existing heating systems using gas and oil onto a direct electrical heating supply paid for by the tenant themselves. This has the advantage of giving the tenant the freedom to manage his/her heating costs and reduce the administration required in the department to calculate and collect appropriate recharges.

In the meantime under the principle of user pays the department will continue to collect the fuel supply costs from the end user.

GAS

492 tenants currently receive their heating and hot water from gas systems. The following table gives the current average charges and the revised charge with the proposed increase of 5%:


Type of Accommodation	Number of Bedrooms	Current Average Price £	Change in Price £ (5%)	Revised Average Price £

Bed-sit	0	11.27	0.56	11.83
Bungalow	2	16.36	0.82	17.18

Flat	1	14.64	0.73	15.37
Flat	2	16.87	0.84	17.71
Flat	3	18.01	0.90	18.91

House	2	18.01	0.90	18.91
House	3	19.25	0.96	20.21
House	4	20.27	1.01	21.28

Maisonette	1	14.64	0.73	15.37
Maisonette	2	16.87	0.84	17.71
Maisonette	3	18.01	0.90	18.91

Impact of the proposed changes

492 tenants will see a 5% increase in their gas heating and hot water charge.

Financial Direction 4.1 sets out at paragraph 5.2 that increases in States charges should normally be limited to 2.5% per annum. Where there is a compelling case for the implementation of an increase greater than 2.5% the prior approval of the Minister for Treasury & Resources must first be obtained. For that reason it will be necessary to request approval for the proposed changes prior to implementation.

The change will have an impact on the calculation and payment of Income Support benefits to those tenants entitled to Income Support. It is necessary to provide 6 weeks notice of the changes so that data can be uploaded to the Income Support system and benefits can be recalculated with letters being sent to all claimants in advance of changes taking effect.

In order to accommodate these requirements the earliest date the department can implement the change to tenants would be 1st March 2010. This date is therefore proposed for implementation.

Recommendation

That the Minister approves an increase of 5% in the charges levied for gas heating, subject to the approval of the Minister for Treasury & Resources.