The Communications and Utilities Regulatory Authority has decided that there will be no increase to gas tariffs at this time.
Despite a 27.5% increase to the price cap being supported by Tynwald in October, Manx Gas had returned to the regulator to ask for more.
CURA said that Manx Gas wrote to it in November, ‘advising that in light of continuing high commodity prices it was losing “significant profit” versus the previous year’ and asked for a “further review from CURA and recommendation of either another price increase or an alternative solution to rectify the significant impact on our business”’.
However, the Regulator has said while an increase would be the Manx Gas’ ‘benefit’, it would ‘disproportionately negatively impact on the Authority’s other stakeholders, specifically gas consumers and the public interest’.
Manx Gas’s Bid
CURA said that Manx Gas said that it is ‘currently constrained in its ability to increase prices to reflect movements in commodity prices; this creates uncertainty over its ability to recover costs in a timely manner’.
The regulator added: ‘It notes that the regulations that would allow for this are not likely to be in force until early 2022. It therefore requested the Authority “to assist us in minimising the impact and continued decreasing profit on our business to ensure we can continue to invest in infrastructure on the Isle of Man”.’
It added that the risk of insolvency for Manx Gas if prices didn’t increase was considered ‘low’ but that the company has said “it is not sustainable for us in the long term to continue to absorb this loss of profit”. The company did not put forward a figure for an increase that it wanted to see.
CURA went on to say that the volatility in the global gas market is not helping the company, its customers or the regulator itself in reaching agreement over where prices should be.
Of the wider issues CURA considered, it said that it was also mindful of inflation.
It said: ‘It is clear that further tariff increases at this time would have a disproportionately negative impact on customers, especially vulnerable customers. In addition to the direct impact on consumers the Authority also should be mindful of the impact of higher gas prices on consumers, and the wider public, specifically through inflation as this has an impact on all members of society. Inflation is currently higher than at any stage in the last 10 years and a gas price increase would feed into the inflation rate directly.
‘There are also wider economic impacts. Businesses reliant on gas would face increased operating costs and would likely pass these costs onto consumers, who are already facing increased costs of heating their homes. In this way any increase in tariffs would have an indirect impact on inflation in addition to the direct impact described above.’
CURA also noted that despite the historic high prices, ‘current market highs were not the motivation for Manx Gas seeking the review of tariffs at this time’.
You can read the full release below.