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.
The increase takes effect from 1st March 2010.
REPORT PREPARED BY:- ………………………………………….
Jason English, Senior Management Accountant
REPORT APPROVED BY:- ………………………………………...
John Hamon, Finance Director