Jersey Electricity and Guernsey Electricity have signed an agreement to share the cost and capacity of the ã70m Normandie 3 project for the installation of a new 100MW interconnector from Jersey to France, which is due to be installed in 2015.

The agreement also provides for cost and capacity sharing in the potential replacement of the original interconnector between Jersey and France (installed in 1984), which suffered a permanent failure last June.

Since the loss of the original Jersey/France interconnector, both companies have had to supplement power imported through the sole remaining Jersey/France interconnector with more expensive oil powered local generation. The restoration of more cost-effective importation capacity has therefore become a high priority for both islands.

Jersey Electricity began the complex planning process for the Normandie 3 project eight years ago, with French planning consents being eventually secured last December. In February Jersey Electricity signed ã40m contracts with Prysmian for the delivery of the project.

This latest joint venture agreement is, in effect, an extension of the joint venture constituted in 1998 as the Channel Islands Electricity Grid (CIEG), a jointly owned and managed company, seeded to provide the governance and investment structure for the investment in the second interconnector between Jersey and France and the first between Jersey and Guernsey.

This new arrangement will similarly be operated by CIEG. The leaders of both companies were present in 2011 at the signing of a 10 year supply contract worth ââ¬1bn with EDF and both companies worked closely together on the successful, complex repair of the Jersey/Guernsey interconnector last summer.

Chris Ambler, chief executive of Jersey Electricity, said: "This is an immensely important milestone in a successful long-standing partnership with Guernsey Electricity.

"To date, the partnership has delivered significant value for both islands and in the future promises to pave the way for co-investment in new cables and future joint initiatives that will give secure and affordable electricity supplies into both islands for the next 25 years or so. It is fitting that we are able to forge ahead with the next stage of this relationship at a time when there is considerable interest in closer cross-Channel Island working.

"Our most immediate priority continues to be the delivery of Normandie 3, on time and on budget, relieving the pressure on power supplies from 2015. The next priority will be to explore the replacement of the original Jersey/France interconnector and a new Jersey-Guernsey link, all of which will be of immeasurable benefit to both our island communities.'

At 10:14am: (LON:JEL) Jersey Electricity Company (The) share price was +2.5p at 290p