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Public are being 'misled' over reasons for electricity hike, says campaigner

Increases to wholesale costs "isn't" the reason following review of MUA

​As residents in the UK prepare to pay less towards their energy bills from July, people on the Isle of Man are bracing for price hikes. 

Manx Utilities announced a two-stage increase of the Island's electricity tariffs - the first increase came into force in April with a further 30-percent rise expected at the start of July.

People can also expect another increase of at least 10-percent next year, according to a financial review by the economic consulting company NERA.

The findings were released in March by Manx Utilities and revealed the authority had debts of £451m and would be required to increase revenue by 60 per cent this year to keep up with its Baa2, otherwise known as 'Moodys' rating.

That rating ranks organisations based on their financial stability and looks at factors including the likelihood of bankruptcy.

Barry Murphy is a campaigner and the administrator of The Moneywatch Group - which analyses energy supplies on the Island.

Having read the report, he claimed MU has put itself 'in a seriously poor financial position' and blamed it on mismanagement:

Mr Murphy raises a number of issues including whether or not the increases we're seeing are - as we've been told previously - due to volatility in the energy market, or is it because of this near half-billion pound debt?

The NERA report sets out five options for Manx Utilities to consider.  However, each in their own right gave implications of what rises to electricity tariffs can be expected the following year.

The authority chose the largest increase to tariffs, but staggered as we've seen, with a 30-percent rise in April and further increase due from the beginning of July - however, the report also shows a 'required' increase of at least 10-percent next year.

Arbory, Castletown and Malew MHK Jason Moorhouse has consistently asked questions in the House of Keys about Manx Utilities and the impact prices are having on residents:

Manx Utilities has provided this response:

•        NERA identified that Manx Utilities’ energy supply costs were significantly above the level of income Manx Utilities was receiving from customers and so tariffs needed to increase to ensure Manx Utilities could continue to meet payments to its suppliers over the coming year.
•        NERA considered a number of different tariff increase options for 2023.  Page 30 of its report shows that the only option that would fully meet Manx Utilities’ minimum cash requirement was a single +60% increase from April 2023 (Option 5).
•        The Board noted the impact a single sizeable increase would have on customers and that splitting the increase with a +30% increase in April 2023 and a further +30% increase in July 2023 could reduce this impact (Option 4).  This option would increase Manx Utilities’ cash shortfall for the year by around £5 million and this was considered tolerable.
•        The other options considered (Options 1-3) each increased the cash shortfall for the year by more than £10 million and this was projected to be unaffordable.
•        As such, Option 4 was considered to be the best compromise between the impact increases would have on customers and Manx Utilities raising sufficient income to meet its costs.
•        A further increase in April 2024 of +10% was projected as part of NERA’s modelling.  Manx Utilities enters into fixed price, forward purchase energy contracts to provide price certainty for customers and the last of the contracts entered into before the current energy crisis, at prices lower than current market prices, will expire in March 2024 and so a further tariff increase was considered likely to be needed to offset the slightly increased average energy costs that Manx Utilities would face from April 2024.
•        It should be noted that wholesale energy prices remain highly uncertain and volatile and it is not possible to say with certainty what tariff changes may be required to be applied in April 2024.  
•        Manx Utilities will continue to monitor energy markets and seek to minimise the costs needing to be borne by its customers.  To this end, at the start of the month Manx Utilities commenced a review of the tariff increase due in July and expect to announce the conclusions of that review within the coming week.

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