Manx Utilities Chairman Rob Callister MHK has said electricity bills will have to go up, but the authority is working to keep them as low as possible.
Residents have already seen a steep gas bill increase this winter and Mr Callister says the increase in wholesale prices will lead higher electricity prices going up too.
Speaking to Gef, the Onchan MHK said: ‘I’ve only been in [the job as Chairman] a couple of weeks, there’s been a lot of learning, a lot of catching up and reading, but we are facing a significant financial challenge within the organisation.’
Mr Callister said he was due to meet the Manx Utilities board for the first time on Friday where they would be discussing prices for the coming year.
He added: ‘I think, if I’m being honest, an increase is highly likely, I can’t predict what the board will say, but what I can use for guidance is that in October 2018, there was a Tynwald resolution that put in place a five year pricing strategy for Manx Utilities and that also relates to water, sewage and electricity.
‘It’s normally based around inflation, or the Consumer Price Index, set in September and we know that that figure was 5%, so that is a benchmark that we have to honour. If I don’t like the pricing structure, or if the board doesn’t like the pricing structure, then I have a duty to go back to Tynwald and ask for that to change. Now, in addition to that, there is a clause in that agreement, which says if there is volatility within the market and we know what’s happened in the last year in regards to the wholesale price of gas, especially price per therm. So based on that, there is an opportunity that, if the organisation is under extreme financial press, to also to make an emergency adjustment as well.’
Mr Callister said that there does have to be a sense of realism around this, as Manx Utilities has spent a lot of money on trying to get through this period without impacting residents and businesses anymore than they already have been. He also noted that the four year strategy of ‘hedging’ has protected customers from some of the worst volatility of the market. However, he did indicate that he wants to resist a price increase, and keep it as low as possible, for as long as possible through the winter given the pressures islanders are already under with the increase in gas bills.
‘In the last period, we hedged nearly 70%, so that gives a very clear to customers of how much our charges will be’, Mr Callister said. ‘It also helps the organisation when they look at their own balance sheet and accounts.’ However, that 30% which is open to the market forces is where Manx Utilities, like other energy firms, has had to spend serious amounts of money to keep the lights on which is what the board now needs to decide what needs to be done.
Over the last five years, residents have seen prices increases. In 2019/20, it was 2.4%, in 2020/21 it was 1.1% and in 2021/22, it was a 0% increase. However, given the level of inflation, 2022/23 is set for at least a 5% increase. Although this does not take into account the ‘extreme financial pressure’ that Mr Callister referred to in our interview.