Gas Prices Will Rise on April 1 As Well

Less than 48 hours after Tynwald members excused themselves from having any meaningful control over the island’s gas prices the industry regulator has confirmed that prices will rise from April 1.

This is the same day that the first of a phased 30% increase in electricity prices will kick in as part of Manx Utilities earlier announcement that will spread across the two increases across April and July.

In a statement, the Communication and Utilities Regulatory Authority (CURA) said the new framework agreed by all Tynwald members, with the exception of Onchan MHK Rob Callister, will ‘remove the price freeze that has kept tariffs at 9.1p per kWh for consumers’.

CURA said: ‘Tariffs will increase from 1st April and the Authority is aware that consumers will want to know what happens next.

‘The Regulations allow the Authority to introduce what it has determined to be a fair permitted return
to be generated by Manx Gas; namely a 5.45% weighted average cost of capital and a 2.1% retail
margin; the return is to be used to reinvest in and maintain the gas network and also to finance
business operations as well as give a reasonable return to shareholders and investors.

‘The permitted return represents only a small percentage of the tariff that consumers pay, at the
moment due to the high wholesale cost of gas, a large proportion of the tariff will represent the cost
of the gas itself. As the cost of gas consumed is a ‘pass-through’ cost, as markets return to more
normal levels the tariffs will also be reduced.’

The framework requires Manx Gas to ‘set its own tariffs and submit its proposals to the Authority prior to
implementation’. Manx Gas must set its tariffs in such a way that the revenue cap is not exceeded.
CURA said it ‘expects to receive Manx Gas’ tariff proposals over the next few days and once these
have been reviewed the new tariffs will be announced publicly’.

The Authority’s Chief Executive Officer, Ivan Kiely, commented: ‘The introduction of these
Regulations is the result of a many months of hard work by the Authority and they are vitally
important to ensure the ongoing viability of the gas network at such a volatile time for the energy
market globally. Had they not been introduced, it is likely that our Island’s gas supply would have
been put at significant risk and that would have had wide reaching consequences for not only gas
consumers but for many businesses also.

‘All of us at the Authority recognise that the upcoming tariff increase will be worrying for many gas
consumers, especially given the rising cost of living more generally. These next few months will likely
be difficult for many whilst prices remain at these unprecedented high levels, however, I can assure
all gas customers that the Authority closely monitors wholesale prices and will ensure that whatever
tariff is charged by Manx Gas will be reflective of actual costs.’