The Communication and Utilities Regulatory Authority has revealed that Manx Gas has applied for a second review of gas prices on the island.
In October Tynwald backed the recommendation of CURA to increase the price cap by 2.1 pence per unit of gas (27.5%). This, Manx Gas said, allows it to break even on the gas it is selling on island.
However, in a press release dated December 10, CURA said that Manx Gas approached it for a further review of the tariffs on November 29.
The authority said Manx Gas’ justification was ‘on the basis of “minimising the impact and continued decreasing profit on our business, to ensure we can continue to invest in the infrastructure on the Isle of Man”’.
CURA added: ‘This, it is claimed, is in the face of continuing volatility and high prices for natural gas in the international commodity markets. It is further claimed that the current Regulations, which are in place while the Isle of Man is in a transitionary period between the 2015 Regulatory Agreement and the future regulatory framework currently under consultation, prevents Manx Gas from increasing tariffs further to maintain profit levels. Manx Gas notes that it can continue to supply gas to the customers but points out that it is likely not be sustainable to “absorb this loss of profit” in the long-term.’
It further said that the 2.1p was increase ‘not designed to ensure that profits are maintained or that dividends are paid, but to ensure that the island’s public gas supplier remains solvent during an unprecedented international crisis’. The authority said this remains its primary aim.
When the October increase was granted, it required Tynwald approval, however it is not yet clear whether Tynwald would need to approve a second increase if it was recommended by CURA.
Gef became aware of the December 10 release because of a post on a Facebook group ‘IOM GAS CUSTOMERS WORKING GROUP‘ ran by campaigner Barry Murphy.
Mr Murphy told Gef: ‘The Gas (Tariff Fixing) regulations put in place at the beginning of 2021 had the intention to protect gas consumers from unexpected price hikes in the interim or temporary period, before the full and long term regulatory framework is put in place hopefully sometime in 2022. It is clear that wholesale prices have not increased drastically since the last price increase in October and I hope that this application for this increase is turned down.’
CURA has said it is ‘in the process of reviewing all of the information submitted by Manx Gas, as well as taking account of other economic and market data available, and will make a determination on whether any adjustment to tariffs is required at this time’.
It added: ‘In doing so, it will be mindful of the need to strike a balance between the needs of consumers, Manx Gas, and the wider public interest. It will also liaise directly with Manx Gas and other stakeholders, as required, during its review. The review is taking place in accordance with Decision Notice 2021/013.’
Gef has approached Manx Gas for comment.