New Gas Regs to go to Tynwald

The Communications and Utilities Regulatory Authority has outlined new regulations which will go before Tynwald next month that will govern gas prices on the island.

The introduction of these Regulations follows the Authority’s Roadmap to Regulation which was set
out in April 2021.

CURA has said that the new regs will establish a framework that is ‘fair, transparent, and non-discriminatory and attempts to best balance the interests of all stakeholders and to provide stability for consumers and certainty for investors and are in line with international best practice’.

The Authority’s Chief Executive Officer, Ivan Kiely, commented: ‘This regulatory framework is the
next step in bringing independent regulation that is in line with international best practice to our
island. It is unfortunate that timing of introducing these Regulations coincides with the economic
disruption caused by the global pandemic, but also the unfolding events in Ukraine over the past
few days which is adding to the uncertainty surrounding commodity gas prices.

‘However, we do firmly believe that this is the right thing to do. These Regulations will help us to
manage the risk to the public gas supply caused by the turmoil in the international markets and
ensure continuity of supply. I think there is little doubt that tariffs will increase in the short-term,
though it is not possible as yet to say by how much as the wholesale markets are incredibly volatile.

‘All of us at the Authority absolutely understand the concerns that consumers will have, and
empathise with customers who are already struggling with the rising cost of living.
This is a difficult situation and unfortunately there is little that can be done to prevent a global
energy crisis from impacting on our island. In the longer term, gas consumers will benefit from this
regulatory framework and we have longer term plans to introduce tighter regulatory controls on the
gas supplier.’

If Tynwald backs the regs, the new framework will take effect from April 1. In advance of this the Authority will be publishing further information on its website in relation to how tariffs are made up.

Volatile

Gas prices are currently around four to five times higher than average due to the current global energy crisis and the conflict in Ukraine, as a result Manx Gas will likely need to increase gas tariffs in order for it to be able to continue to supply gas in the short term. CURA has said: ‘Unfortunately, due to the extreme volatility in the international markets it is very difficult to predict what tariff may be on the April 1, but the Authority will be working to ensure as much information as possible is available to consumers.’

Once market stability returns and wholesale gas prices do begin to reduce, the regulatory regime that is being proposed will see that these savings will be passed on to gas consumers in a timely manner.

The Authority will shortly be publishing its Final Determinations, which set out the permitted return, customer categories, and how costs are to be allocated by the company. The Regulations will remain in force for a period of five years to ensure stability for consumers and to provide certainty for future investment in the gas network.