Electricity tariff reduction for 1 July 2023
Manx Utilities has announced a reduction in the intended 6 pence per unit increase scheduled for 1 July 2023 to 2 pence per unit, due to the fall in wholesale energy prices.
The tariff from 1 July is now comparable with the UK OFGEM default tariff cap with Isle of Man domestic customers’ charges now 10% below the GB average price having previously been significantly below it. The tariff change will mean that a domestic customer using 2,900 kWh per year will see their annual cost increase from £942 to £1,003 from July 2023 (previously £1,133). This compares to the OFGEM Default Tariff Cap just announced GB average of £1,137.
Manx Utilities shielded customers from the increases being experienced in the UK by maintaining prices below the OFGEM price cap over the last 18 months by depleting reserves. The use of external specialists enables tariff-setting methodologies used by regulatory authorities elsewhere to determine the appropriate minimum level of income needed to ensure Manx Utilities can continue to operate and provide essential utility services to its customers.
Manx Utilities committed to continue to monitor wholesale energy costs to ensure their tariffs remained as low as possible whilst maintaining the sustainability of the business to meet its financial obligations and continue to delivery essential utility services.
Given the high level of wholesale energy prices and price volatility over the last two years, Manx Utilities engaged independent specialists, NERA, to advise on the level of tariffs required for 2023. NERA undertook a review of their previous assessment during May and the recent reductions in wholesale energy prices has enabled Manx Utilities to significantly reduce the level of increase required to take effect from 1 July 2023.
Chair, Tim Crookall MHK said, “I am extremely conscious of the pressure that high tariffs have on both individuals and businesses on the Island which is why the Board felt it was important to continue to involve external specialists to support the tariff setting process. We will continue to monitor wholesale energy prices and react accordingly should changes be required. In the meantime we continue to predict a loss of approximately £50M for the year ending 31 March 2023 financial year end and, despite our reserves being utilised to shield customers from sharp price hikes, we remain on schedule to repay bonds attributed to water and power infrastructure projects due in 2030 and 2034.”