The price of electricity in the Isle of Man will rise next month but the increase will be phased over two stages to reduce the impact on households and businesses.
From 1 April there will be a 15 per cent rise in electricity tariffs with a further 15 per cent rise scheduled in July.
The initial price increase means that electricity charges for most domestic and commercial users will increase from 16.9 pence per unit to 19.4 pence per unit. A second increase from 1 July would mean the cost for domestic and commercial customers would increase to 22.0 pence per unit.
Energy prices around the world have increased significantly over recent months, particularly the cost of natural gas, which is used to generate the majority of the Island’s electricity.
A year ago the average annual wholesale price of natural gas was around 50 pence per therm. Today, the price per therm is around six times more expensive at £3.00 per therm. Wholesale prices for natural gas recently went as high as £7.50 per therm, before prices stabilised. Manx Utilities uses around 30 million therms of natural gas each year.
Discussions have been taking place between the board of Manx Utilities and the Council of Ministers on how best to approach the growing costs of generating electricity on the Island.
The Chief Minister Alfred Cannan MHK said:
“The global price of oil, gas, petrol, and diesel have increased significantly in recent months with further sharp price spikes since Russia’s invasion of Ukraine.
“These rising prices mean that it is going to become considerably more expensive to heat and light our homes, to drive our vehicles, to operate businesses, and to run essential public services.
“The energy markets have been volatile for some time and even more so following Russia’s invasion of Ukraine. There is uncertainty around how long the conflict will last and what longer-term consequences there may be.
“The Council of Ministers has worked with Manx Utilities in the best interests of the Island to determine a way forward that reflects the increased cost of generating electricity, but which also reduces the impact of such a sharp price rise. I am grateful to the Manx Utilities board for their openness in engaging with the Council of Ministers during this very difficult period of volatility.
“Phasing the increases in this way will buy some time to allow Government to better understand the longer term implications for the energy markets and to consider what broader economic support may be required for our community.
“The Council of Ministers is now urgently considering the impact of these difficult price rises. We are committed to building a secure and sustainable future for our Island, and in doing so, now supporting those who will be hardest hit by a significant increase in the cost of living.”
Chair of Manx Utilities Rob Callister MHK said:
“The board has been mindful of its responsibility to ensure it can cover the cost of generating electricity from the revenue it receives from electricity bills. With such a significant rise in global gas prices, there has been a need for difficult decisions around passing on cost increases to consumers. I am pleased the Board has been able to work with the Council of Ministers to explore how to cushion consumers from such a stark rise in prices, although I am in no doubt that these price rises will cause difficulty for some.”
Treasury Minister David Ashford MHK said:
“This price rise was inevitable given global energy price volatility and will bring a substantial increase to the cost of living pressures being felt across the community. I expect to update Tynwald in April on the Treasury’s assessment of the impact of this situation and any action considered necessary at that time.”
