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Overview of new agreement with Manx Gas to go before Tynwald

Friday, 17 July 2020

At its July sitting next week, Tynwald will have the opportunity to debate an overview of the terms of a new agreement, between the Isle of Man Government and Manx Gas, which seeks to continue to regulate the Island’s gas market on a voluntary basis. 

The overview of the proposed gas regulatory agreement, for which Tynwald approval is being sought, sets out a number of measures which would benefit all domestic customers and business customers using 12,000 or less kilowatt-hour (kWh) per annum of natural gas – who are termed as ‘regulated customers’. This includes: 

  • A reduction in natural gas tariff for regulated customers of 7.4% due to the weighted average cost of capital (WACC) reducing from 9.99% to 6.99%
  • A commitment that any reduction in the charges between the Isle of Man Government and Manx Gas for the gas extension project will be passed on to regulated natural gas customers - it is expected that this could reduce tariffs by up to 5.2% the total reduction could be up to 12.6%
  • A credit for regulated natural gas customers as the agreement – and therefore price reductions – would be backdated to 1 January 2020 
  • Unless agreed otherwise, the tariffs for liquid petroleum gas (LPG) will not rise at a faster rate, subject to commodity prices, than regulated natural gas tariffs. 

Minister for Policy and Reform, Ray Harmer MHK, said:

'I am pleased that we have been able to progress negotiations with Manx Gas on bringing about fairer and more reasonable pricing for the Island’s domestic natural gas customers.  

'I believe the terms of a new agreement between the Isle of Man Government and Manx Gas achieve this aim and I look forward to what will be an important debate in Tynwald next week.' 

The new terms follows a motion at the June sitting of Tynwald which saw the Isle of Man Government give notice to Manx Gas on 30 June 2020 that it was terminating the existing voluntary agreement, which had been in place since 24 April 2015. 

If Tynwald approves the high level terms of a new agreement, heads of terms will be drafted and brought back to the October sitting of Tynwald for final approval.  

The new agreement would run for 10 years, with review and break clauses incorporated. 

The motion in relation to Manx Gas was published as part of a supplementary order paper.

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