Manx Gas requested a meeting with the Chief Minister and the Treasury to discuss potential taxpayer support so it could pay its bills.
We can also reveal that the energy supplier cancelled a direct debit to Manx Utilities on Christmas Eve 2021 as its problems deepened.
These details were revealed following an FoI by Gef that sought the release of all written communications between the two organisations, all minutes of meetings held and whether or not Manx Gas had paid all of its bills to Manx Utilities.
Minutes from a meeting on January 24 2022 between Manx Gas and Manx Utilities show that Island Energy Group CEO Jo Cox had told the meeting of the ‘difficulties in trying to run the business without certainty of the proposed new regulation, resulting in a difficult first quarter’. The new regulatory framework was later passed by Tynwald days before the recent 58% in gas prices for islanders, up 101% over the last year.
The minutes add that Ms Cox said ‘that a meeting with the Chief Minister and Treasury had been requested to discuss potential short-term government support for Q1 so that the outstanding Manx Utilities’ invoices can be paid’.
Manx Utilities has, in a statement, revealed that Manx Gas’ overdue payments to Manx Utilities peaked at £9m earlier this month, but that it has since brought this figure down. (see more below).
At an earlier meeting in January the issue of solvency of the business was discussed with Ms Cox saying that if gas prices didn’t rise, ‘Manx Gas’ perspective is that the only other option is government support’, which the company believed would have to come through Manx Utilities. Something Manx Utilities said it legally wasn’t able to do.
Later in that meeting, Phillip King, CEO of Manx Utilities, said the statutory board had ‘extreme concern that over £6m worth of gas had been supplied and the direct debit had been cancelled’.
The minutes summarise that Mr King said: ‘Clearly, Manx Gas needed to honour its contractual arrangements with Manx Utilities and it would be preferable if parties could work together on this.
‘Mr G Fooks [Island Energy Group Chief Financial Office] advised that Manx Gas understand the contractual obligation that they have to pay for the gas they have used and appreciated that receipt of the letter will have caused extreme concern’.
The letter in question is one sent by Ms Cox to Mr King on December 23 2021 which the Chief Minister was CC’d into. This followed a public statement by the Communications and Utilities Regulatory Authority (CURA) on December 22 which saw it refuse a request for a second price increase of the year. In that statement, the regulator said it believed that there was a ‘low risk’ of Manx Gas going insolvent despite denying its request.
Manx Gas disputed this in its December 23 letter when it said: ‘This lack of action by CURA is a significant error in their oversight of Manx Gas, which places Manx Gas in solvency difficulties.’
That letter goes on to say that Manx Utilities had rejected Manx Gas’ efforts to hedge its gas buying since September 2021 on ‘the grounds that IOM Government and Manx Utilities’ board perceive us to be credit risk’. The belief that Manx Gas was a credit risk was made public by Ms Cox during her recent appearance in front of the Economic Policy Review Committee.
In its statement to Gef, Manx Utilities has explained: ‘Prior to Christmas 2021 Manx Utilities was concerned with the possible impact of high wholesale energy prices on Manx Gas’s ability to pay for the natural gas it was purchasing from Manx Utilities. As previously reported, a request from Manx Gas to forward purchase natural gas for winter 2021 was fulfilled but a further request was deferred pending the receipt of further information from Manx Gas, which Manx Gas declined to provide.’
It added that on Christmas Eve ‘Manx Utilities was notified by its banking provider that inward payments due from Manx Gas totalling £2.3 million had been cancelled by Manx Gas’.
A Damaged Relationship
Following the cancellation of that payment, Simon Clague, Manx Utilities Finance Director, emailed Mr Fooks at Island Energy Group on December 29 2021 to remind him that Manx Utilities was ‘due to collect £2.2m from Manx Gas today in accordance with our contractual trading terms’.
He added: ‘Please could you confirm you have sufficient funds and that this payment will clear today, or let me know if you need to tell us anything about the payment and the Direct Debit status? I am aware of our previous conversations and statements made by Manx Gas that it has sufficient funds to continue trading and I am therefore very concerned about the BACS notification.’
The next day he again emailed Mr Fooks to say: ‘The lack of any notification from Manx Gas of its cancellation of the Direct Debit has put our Board in a very difficult situation and has damaged the relationship between Manx Utilities and Manx Gas. Please get into contact with me as soon as possible – in the meantime I consider the actions taken by Manx Gas to be in breach of our contractual relationship and I am seeking further advice as to how we protect our customers from any further financial losses from Manx Gas.’
On January 7, with payment still outstanding, Mr King said Manx Gas was being given until the end of business on Wednesday January 12 to pay Manx Utilities the money it was owed it would ‘start formal action through our legal advisers to recover these outstanding payments’.
One of the other big issues to arise from Ms Cox’s Tynwald committee was that Manx Gas’ request to pay its bills every 90 days instead of every 30 days had been rejected by Manx Utilities.
Despite this, Manx Utilities said that in January 2022 Manx Gas continued to be ‘outside the 30 days terms agreed and up to 104 days after an invoice was issued’.
It added: ‘During 2022 Manx Gas has made two payments to Manx Utilities – the £2.3 million paid at the end of February 2022 and £6.5 million paid on 19 April 2022. The overdue debt from Manx Gas to Manx Utilities peaked at £9.0 million in April 2022 and currently stands at £2.4 million, with a further £3.2 million invoiced but not yet due for payment.
‘Manx Utilities continues dialogue with Manx Gas to ensure natural gas is provided to Manx Gas’s customers and to ensure it is paid in full and on time for gas and gas services supplied to Manx Gas.’
What We Don’t Know
Gef received the response to our FoI on Monday evening. At this time, we have been unable to confirm what, if anything, was discussed or agreed during the meeting between the gov and Manx Gas.
All we do know is that during her appearance in front of the Economic Policy Review Committee, Ms Cox confirmed that she had met with the Treasury but added: ‘I don’t want to divulge the conversations that we had, they were private conversations.’
However, as of Monday evening, it is understood that the Manx gov has not given any financial support to Manx Gas.
Manx Utilities’ Statement in Full:
‘Manx Utilities received a Freedom of Information request on 21 February 2022 seeking confirmation that Manx Gas had paid all bills owed to Manx Utilities between September 2021 and February 2022, and requesting copies of correspondence between Manx Utilities and Manx Gas on this matter.
This morning Manx Utilities has published its response to this request, which confirms that Manx Gas did not pay all its invoices from Manx Utilities on time and in full.
Manx Utilities has been aware of both the potential public interest in the non-payment of significant sums of money to a public body and the potentially commercial sensitivities arising from the disclosure of such information. Manx Utilities requested several extensions from the requestor in order to consult with all parties, receive advice, collate feedback, consider the application of exemptions and appropriate redactions and prepare the response.
Prior to Christmas 2021 Manx Utilities was concerned with the possible impact of high wholesale energy prices on Manx Gas’s ability to pay for the natural gas it was purchasing from Manx Utilities. As previously reported, a request from Manx Gas to forward purchase natural gas for winter 2021 was fulfilled but a further request was deferred pending the receipt of further information from Manx Gas, which Manx Gas declined to provide.
On Christmas Eve Manx Utilities was notified by its banking provider that inward payments due from Manx Gas totalling £2.3 million had been cancelled by Manx Gas. Manx Gas subsequently confirmed this was the case.
In January 2022 Manx Gas requested that its payment terms be extended from 30 days’ from invoice date to 90 days’ from invoice date. This request was refused by Manx Utilities but payments from Manx Gas continued to be outside the 30 days terms agreed and up to 104 days after an invoice was issued.
During 2022 Manx Gas has made two payments to Manx Utilities – the £2.3 million paid at the end of February 2022 and £6.5 million paid on 19 April 2022. The overdue debt from Manx Gas to Manx Utilities peaked at £9.0 million in April 2022 and currently stands at £2.4 million, with a further £3.2 million invoiced but not yet due for payment.
Manx Utilities continues dialogue with Manx Gas to ensure natural gas is provided to Manx Gas’s customers and to ensure it is paid in full and on time for gas and gas services supplied to Manx Gas.’
You can view all documents released as part of our FoI here: