Gas Prices to rise (again) on April 1

Gas prices will rise (again) from April 1.

The increase coincides with the first of a phased 30% increase in electricity prices, announced by Manx Utilities this week.

In a statement the Communications and Utilities Regulatory Authority says the new regulations remove the price freeze that has kept tariffs at 9.1p per kWh for consumers.

The full statement reads:

"On 15th March 2022 Tynwald approved the new Gas (Tariff Fixing)(Parameters) Regulations 2022 (the Regulations).

The Regulations come into force from 1st April 2022.

The key changes that the Regulations introduce include capping the revenue that Manx Gas may earn from regulated activities and introducing a formal process for tariff reviews and adjustments.

These Regulations remove the price freeze that has kept tariffs at 9.1p per kWh for consumers.

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.

It also 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.

The Authority expects to receive Manx Gas’ tariff proposals over the next few days and once these have been reviewed the new tariffs will be announced publically.

The Authority will keep consumers up to date through its website over the coming days."

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.”