The chairman of the Manx Utilities Authority has said the recently announced electricity tariff increase of 30% is appropriate for the level of costs expected.
It was announced on March 17 and the rise will be applied in two phases of 15%, with one in April and the other in July.
Rob Callister MHK said in a sitting of the House of Keys earlier this week that energy costs have been ‘highly volatile’ over the last 12 months, specifically wholesale natural gas prices and electricity prices.
‘As such cost projections can vary significantly from day to day and this has made setting the electricity tariffs for 2022 very challenging for the Manx Utilities board,’ he said.
‘We believe the recently announced tariff increase is the most appropriate tariff level for the level of costs expected.’
Mr Callister’s comments were in answer to a question posed by Douglas Central MHK Chris Thomas on whether the tariff reflected the cost of delivering electricity.
Mr Thomas suggested the cost of electricity in 2021/22 wasn’t reflective of the costs of delivering electricity.
Mr Callister said: ‘We did spend around £16m shielding our customers during the last financial year but we are currently in a very volatile energy market where the price changes every hour every day and it’s incredibly difficult to foresee what those prices may be.
‘Manx Utilities hedged around 70% of its supply last year and as we go into the new financial year we’ve managed to hedge around 50% of our supply at around 47p per unit, however the remaining 50% who knows what price we’ll pay.
‘In respect of a financial point of view, we have doubled our costs so instead of paying a normal £16m in any given year, we’re anticipating to pay around £33m in the next financial year to cover those costs.’
Manx Utilities had previously warned that the rising cost of natural gas (which is used to produce most electricity) could lead to a rise of up to 39%.
Mr Callister also confirmed the last review of MUA tariffs was undertaken at the end of last year with a report being updated currently to include the final tariffs.
It had taken ‘longer than usual’ due to the volatility of energy costs which meant it took time to set the tariff.