Gas prices set to soar amid global crisis

Tynwald will be    asked at its October sitting today to approve an increase to the cap on the prices consumers can be charged for gas.

A review of pricing by the Communications and Utilities Regulatory Authority (CURA) – the Island’s gas market regulator – was triggered following the unprecedented increase in gas prices across the globe in recent weeks, with the cost of wholesale gas quadrupling in price. During September 2021 the price of gas on the international commodity markets recorded the highest prices experienced in many years due to several economic and political factors.

It means a unit of gas now costs more than Manx Gas is able to charge its customers. This is in part due to stronger gas pricing law introduced at the start of this year to protect consumers through capped prices. 

If the cap increase is approved by Tynwald, Manx Gas would be able to increase charges to consumers by up to 2.1 pence per unit of gas. 

Manx Gas wrote to CURA on 6 August 2021 formally requesting an increase to the maximum tariffs it can charge, set out in the Gas (Tariff Fixing) Regulations 2021.  Manx Gas provided clear evidence that the criteria for triggering a review had been met. CURA conducted a review of the impact that rising gas commodity prices would be likely to have on gas tariffs in the Isle of Man.

Consumers in other jurisdictions across Europe are seeing increases in their gas bills as a result of price rises in the wholesale cost of gas. Ofgem in the UK has recently approved a 28% price increase, as has the Northern Ireland Utilities Regulator. 

Whilst conducting a review into increasing to the maximum tariffs, CURA took account of many factors including: the impact on the consumer; the current and likely future prices on the international commodity markets; the ability for Manx Gas to recover its wholesale costs; and trends and developments in other jurisdictions. What is being experienced at the moment is a global problem and there is unfortunately little that can be done to alleviate the impact it will have in the Isle of Man.

CURA is fully aware of the impact that this increase will have on consumers, especially on vulnerable customers, but the price increases are unfortunate, but unavoidable. CURA must balance the interests of consumers with the need to ensure security of gas supplies and the ongoing operation and maintenance of the Island’s gas network. There is support available for vulnerable customers and those who may struggle with increased energy costs at www.cura.im.

Further adjustments to the price cap may be necessary, including a reduction should the wholesale cost of gas decrease. 

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