Happier diner Posted April 13, 2022 Share Posted April 13, 2022 3 hours ago, Andy Onchan said: Ancala are nothing short of shysters. All MG are concerned about is remitting the management fees to their masters in USA (or wherever) each and every month, regardless of what is or isn't happening here. And what's the shame in that? That's why they are in the game. Quote Link to comment Share on other sites More sharing options...
Happier diner Posted April 13, 2022 Share Posted April 13, 2022 2 hours ago, Bandits said: Ancala are without doubt shysters but I’m sure as a large PE funded infrastructure business they must operate brokerage accounts which allow them to place forward priced contracts for gas and other commodities elsewhere. So it would be interesting to know why the MUA would not place trades on behalf of Manx Gas for gas to be delivered to the IOM on behalf of an Ancala Subsidiary. Why would the MUA do that for them. Quote Link to comment Share on other sites More sharing options...
Bandits Posted April 13, 2022 Share Posted April 13, 2022 12 minutes ago, Happier diner said: Why would the MUA do that for them. Well as the MUA buy their gas for them and provide them access to the wholesale gas market as their broker why wouldn’t they? It’s no different to a stock broker agreeing to place a forward contract to buy on behalf of their client. The article above suggests that the MUA had no conversation in relation to risk mitigation measures like security lodgments or other contracts that could be put in place to cover the deal. The report suggests that they just said no. It’s not clear whether MG can access the market directly via other broking arrangements they have but from reading the gas report it appears the MUA are its main broker and the main way that MG interacts with the wholesale market. Quote Link to comment Share on other sites More sharing options...
Happier diner Posted April 13, 2022 Share Posted April 13, 2022 5 minutes ago, Bandits said: Well as the MUA buy their gas for them and provide them access to the wholesale gas market as their broker why wouldn’t they? It’s no different to a stock broker agreeing to place a forward contract to buy on behalf of their client. The article above suggests that the MUA had no conversation in relation to risk mitigation measures like security lodgments or other contracts that could be put in place to cover the deal. The report suggests that they just said no. It’s not clear whether MG can access the market directly via other broking arrangements they have but from reading the gas report it appears the MUA are its main broker and the main way that MG interacts with the wholesale market. You could be right, but my understanding is that the MUA is merely a carrier. Surely Manx Gas are big enough, old enough, and ugly enough to negotiate their own deals for gas. Quote Link to comment Share on other sites More sharing options...
Bandits Posted April 13, 2022 Share Posted April 13, 2022 11 minutes ago, Happier diner said: You could be right, but my understanding is that the MUA is merely a carrier. Surely Manx Gas are big enough, old enough, and ugly enough to negotiate their own deals for gas. The gas report explains the relationship. I’ll try to find a link. But basically MG buy through the MUA. If they are MGs primary broker and primary access to the market they really do need to explain why they wouldn’t let them place a forward deal or why they didn’t discuss securities or other contracts which might have better managed the counter party risks if they weren’t happy with Ancala’s credit risk. Quote Link to comment Share on other sites More sharing options...
finlo Posted April 13, 2022 Share Posted April 13, 2022 3 minutes ago, Bandits said: The gas report explains the relationship. I’ll try to find a link. But basically MG buy through the MUA. If they are MGs primary broker and primary access to the market they really do need to explain why they wouldn’t let them place a forward deal or why they didn’t discuss securities or other contracts which might have better managed the counter party risks if they weren’t happy with Ancala’s credit risk. Are the MUA not just using their monopoly position to fleece MG and by association us? 2 Quote Link to comment Share on other sites More sharing options...
Bandits Posted April 13, 2022 Share Posted April 13, 2022 3 minutes ago, finlo said: Are the MUA not just using their monopoly position to fleece MG and by association us? If you are really worried that you would be left holding the baby if Ancala went bust then they would have grounds to refuse the instruction to buy as broker. But there are several mechanisms that are used by commodity brokers all the time to manage credit risk for these sort of forward deals. It looks like they didn’t try to accommodate them. So it would be interesting to understand why. Because if they were so bust that they were deemed unworthy of covering a trading position then why are we cutting them a deal on price increases and regulation etc that we the consumer are now paying for? Quote Link to comment Share on other sites More sharing options...
Bazza Smurf Posted April 13, 2022 Share Posted April 13, 2022 8 hours ago, cissolt said: Who made the decision to prevent Manx gas from hedging? What is the impact on the prices we are paying now? There must be a reason why govt won't release the correspondence between Alf and manxgas that gef have requested via foi This news story has come from the economic policy review committee hearing yesterday. The whole 90 minutes can be found on the Tynwald website. Apologies if I am misleading or misunderstanding. Quote Link to comment Share on other sites More sharing options...
Ringy Rose Posted April 13, 2022 Share Posted April 13, 2022 1 hour ago, Bandits said: Because if they were so bust that they were deemed unworthy of covering a trading position then why are we cutting them a deal on price increases and regulation etc that we the consumer are now paying for? On the one hand Ancala were stating categorically that they would go bust if they didn't get a price rise, and on the other hand they appear to be blaming the MUA for the fact that the MUA took them at their word and wouldn't extend credit to them. Ancala were seriously claiming they were weeks away from going bust. Of course the MUA weren't going to extend credit unless Ancala provided evidence that they were good for the money. And, equally obviously, Ancala weren't going to provide any evidence that would support their creditworthiness but would also undermine their argument pushing for the price rise. Slippery doesn't even begin to describe it. 2 Quote Link to comment Share on other sites More sharing options...
Bandits Posted April 14, 2022 Share Posted April 14, 2022 10 hours ago, Ringy Rose said: Ancala were seriously claiming they were weeks away from going bust. Of course the MUA weren't going to extend credit unless Ancala provided evidence that they were good for the money. And, equally obviously, Ancala weren't going to provide any evidence that would support their creditworthiness but would also undermine their argument pushing for the price rise. They werent asked for any evidence according to her statement neither were any other mechanisms discussed that might give them any better security. Quote Link to comment Share on other sites More sharing options...
Non-Believer Posted April 14, 2022 Share Posted April 14, 2022 (edited) 3 hours ago, Bandits said: They werent asked for any evidence according to her statement neither were any other mechanisms discussed that might give them any better security. A difference of opinions then; plus the MUA stated yesterday that they are keeping the situation under review pending the supply of such requested information. The ball would appear to be in MG's Court. Edited April 14, 2022 by Non-Believer Typo 2 Quote Link to comment Share on other sites More sharing options...
SleepyJoe Posted April 14, 2022 Share Posted April 14, 2022 If MGs gas usage is minor in comparison to that of MU, would the latter be exposed to much of a risk? Quote Link to comment Share on other sites More sharing options...
Bandits Posted April 14, 2022 Share Posted April 14, 2022 2 minutes ago, SleepyJoe said: If MGs gas usage is minor in comparison to that of MU, would the latter be exposed to much of a risk? This is the bit of the argument that falls through a crack really. As you say the MUA uses shed loads of natural gas anyway to run the power station. Much more than Manx Gas does so the only real risk is that they might end up with gas that they’d be using anyway even if Ancala went bust. Yes they may have paid a bit more or a bit less for it but they’d be using it anyway. 1 Quote Link to comment Share on other sites More sharing options...
John Wright Posted April 14, 2022 Share Posted April 14, 2022 15 minutes ago, Bandits said: This is the bit of the argument that falls through a crack really. As you say the MUA uses shed loads of natural gas anyway to run the power station. Much more than Manx Gas does so the only real risk is that they might end up with gas that they’d be using anyway even if Ancala went bust. Yes they may have paid a bit more or a bit less for it but they’d be using it anyway. That rather depends on the payment terms between MG & MUA. Do they pay in advance or in arrears? Quote Link to comment Share on other sites More sharing options...
Bandits Posted April 14, 2022 Share Posted April 14, 2022 5 minutes ago, John Wright said: That rather depends on the payment terms between MG & MUA. Do they pay in advance or in arrears? The Gef story seems to suggest 30 days in arrears on the supply side. But presumably it would be normal to require some sort of margin call or deposit or other instrument when placing forward trades? Quote Link to comment Share on other sites More sharing options...
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