Manx Gas Accounts
Bill Henderson, MHK, Chairman of the Office of Fair Trading has reported that the OFT have received and analysed Manx Gas management accounts. In the light of the recent announcement by Manx Gas to increase its prices to consumers by 20% Mr Henderson had asked through the OFT for the company to supply its books for OFT scrutiny.
The OFT recognises that Manx Gas Ltd was under no obligation to provide the requested information and is pleased that the company decided to make a prompt disclosure of its management accounts.
Mr Henderson said “Whilst the public often complain that they are being “ripped off”, the major investigation we carried out last year showed that this was not the case as although gas prices were high the company was not making excessive profit. This action was to assess whether or not the company should be absorbing any of the increased fuel costs.
The OFT has now been able to analyse the financial information provided and compare the results with the benchmarks described in the report into gas prices prepared in February 2008 and published then by the Council Of Ministers. The company’s profits remain within the benchmark level identified as the return on capital employed is less than their cost of the capital. In addition, whilst the details of the accounts are confidential, the OFT can confirm that the company’s profits are less than they were when assessed last year.”
Mr Henderson continued “I was worried that Manx Gas Ltd might be passing on all the costs associated with increased wholesale energy costs to the consumer when they could have chosen to absorb some of those costs. There is also a public perception that the company could be using this situation as a way to maximise profits. The amount of queries this office has received with regards to gas prices certainly requires us to reassure consumers or take appropriate action.” Mr Henderson went on.
“I would hope Manx Gas can continue to absorb what costs they can and that this remains the case at the end of the winter heating period. We have been assured by the company that the fuel cost adjustment will be reduced or removed if the amount they pay for gas falls. This could still be feasible but I am able to confirm that I am satisfied that the company’s profits for the last accounting period are within an acceptable range,” Mr Henderson explained.
“I realise that global energy prices are high and that costs are ostensibly being dictated by world market forces. However it is our job to ensure that consumers are being charged a fair price and that although gas is currently expensive, there is no excessive profiteering. I am pleased that Manx Gas is willing to help us and in turn we can reassure the consumer as far as we can in this respect. However, I have instructed OFT to keep this situation under continuous review as I fully understand the difficulties many of our community are facing with these increases,” Mr Henderson finished.