Electricity Price Hike

[finlo]

3 minutes ago, 0bserver said:

I get that there was the price shock following Ukraine v Russia. But that now appears to be on the way back down with wholesale prices returning to almost pre-2022 levels. 

I have a suspicion that when Tim Johnstone was justifying these price increases with spiel about Russia, he wasn't being totally honest with us. 

Something has obviously happened to change the price. 

1) Has MUA made some duff forward purchases at higher prices than are expected? 

2) Are they just ramping up the prices to pay back their ~£50m losses? 

If it's the latter then there needs to be some form of control on that and MUA need to pay it back over time rather than using a sledgehammer to crack a nut. 

If it was deemed acceptable to limit Manx Gas profits, then it's only right to limit Manx Utilities 'profits'. There's a strong argument CURA should be regulating electricity prices. 

Once again we're smacked in the face by public sector incompetence when trying to operate in a commerical market. 

 

 

No2.

[Non-Believer]

I've cropped this a little to cut out the superfluous. It's from 3 years ago but it would appear that the situation is now somewhat worse. It shows the scale of the debt then, long before any crisis in Ukraine impacting gas prices.

One might therefore suspect that the latest rises are little to do with the price of gas...

[TheTeapot]

27 minutes ago, 0bserver said:

I have a suspicion that when Tim Johnstone was justifying these price increases with spiel about Russia, he wasn't being totally honest with us. 

Something has obviously happened to change the price. 

1) Has MUA made some duff forward purchases at higher prices than are expected? 

2) Are they just ramping up the prices to pay back their ~£50m losses? 

Both. The gas purchases over the winter and onward will have been effectively gambling. And they clearly lost. Gamblers never admit how much they lose.

[Albert Tatlock]

The position for the consumer is far worse than that. 

Back to the 1990s and poll tax riots, instead of upping the resultant community charge, the UK added 2.5% to VAT. The island does not pay the CC so the IOM govt handed the 2.5% back to us by our not having an electricity surcharge. The surcharge came back on us around 12 years ago.

We have been duped numerous times on electricity charges, and will be for decades to come...till we have to upgrade the current power station to whatever solution suits the situation in 20 years time.

It's a right mess.

[CallMeCurious]

17 minutes ago, Albert Tatlock said:

The position for the consumer is far worse than that. 

Back to the 1990s and poll tax riots, instead of upping the resultant community charge, the UK added 2.5% to VAT. The island does not pay the CC so the IOM govt handed the 2.5% back to us by our not having an electricity surcharge. The surcharge came back on us around 12 years ago.

We have been duped numerous times on electricity charges, and will be for decades to come...till we have to upgrade the current power station to whatever solution suits the situation in 20 years time.

It's a right mess.

It's alright the magic windmills will save us all dude. Assuming of course they don't mismanage that too and we end up with the wrong type of wind or some second hand green American ones.

 

[Roxanne]

9 hours ago, 0bserver said:

I get that there was the price shock following Ukraine v Russia. But that now appears to be on the way back down with wholesale prices returning to almost pre-2022 levels. 

I have a suspicion that when Tim Johnstone was justifying these price increases with spiel about Russia, he wasn't being totally honest with us. 

Something has obviously happened to change the price. 

1) Has MUA made some duff forward purchases at higher prices than are expected? 

2) Are they just ramping up the prices to pay back their ~£50m losses? 

If it's the latter then there needs to be some form of control on that and MUA need to pay it back over time rather than using a sledgehammer to crack a nut. 

If it was deemed acceptable to limit Manx Gas profits, then it's only right to limit Manx Utilities 'profits'. There's a strong argument CURA should be regulating electricity prices. 

Once again we're smacked in the face by public sector incompetence when trying to operate in a commerical market. 

 

 

 I agree. It’s a simplistic argument but I think they’re using the Ukraine war to ramp up the prices way beyond what they should be. Jumping on the old bandwagon. 

[Happier diner]

8 hours ago, Non-Believer said:

I've cropped this a little to cut out the superfluous. It's from 3 years ago but it would appear that the situation is now somewhat worse. It shows the scale of the debt then, long before any crisis in Ukraine impacting gas prices.

One might therefore suspect that the latest rises are little to do with the price of gas...

There was a debt, but if you look at the annual report the yearly loss had come right down to breaking even and they were even paying some debt back.

The gas price issue has set that back by about 10 years and undone any gains. 

The latest rises IMO are all about gas price. 

[Banker]

7 minutes ago, Happier diner said:

There was a debt, but if you look at the annual report the yearly loss had come right down to breaking even and they were even paying some debt back.

The gas price issue has set that back by about 10 years and undone any gains. 

The latest rises IMO are all about gas price. 

But they’ve got no plant to reduce any costs with one of the main costs being the very large workforce with lots of highly paid managers 

[0bserver]

Moorhouse with an interesting post on Faceache. So the £50m losses were incurred before the current crisis? 

 

Good Morning,

It is over 12 Months since I asked the Treasury Minister the first questions about the debt that the MUA was acquiring as a consequence of its adoption of a political agenda.

This was the first response of the Chair on March 1st 2022:

Page 47: https://www.tynwald.org.im/spfile?file=/business/hansard/20202040/k220301.pdf

The Speaker: Supplementary question, Mr Moorhouse. 

Mr Moorhouse: 
Thank you, Mr Speaker; and thank you, Chair, for giving us insight into that very challenging process. 

Given the escalating energy prices, what is the total amount now spent keeping the bills at their current level and absorbing the price increases? And what is the source of that money? How is the MUA managing to keep this going? Thank you. 

The Speaker: Chairman to reply. 

The Chair: Thank you, Mr Speaker, and I thank the Member for his supplementary question. At the moment, Manx Utilities has absorbed from its reserves around £16 million, and that has come from funds within the organisation. However, as we enter into a new financial year, that is just not sustainable, and for that reason we have to look at setting increased tariffs from 1st April 2022.

We are still awaiting the MUA’s Annual accounts to the year to 31st March 2022 – The loss could be close to £50 million. Suggesting that at one point the MUA was losing around £1 million a day….
Over the last 12 months, I have asked several related questions.

On Tuesday, in the House of Keys I will as the Treasury Minister:

 On what dates, in the last three months, discussions have been held with the Manx Utilities Authority about the losses that the Authority has incurred since September 2021?

These are the areas I am considering using as the basis of my supplementary questions:

*What has the Treasury done to help the MUA deal with a possible £100 million of debt that the MUA has built up over the last 18 months? Is an agreed plan now in place and if so when will this be announced? Has the option of repurposing the £26 million loan mechanism that was devised to support the price freeze?

*What role did the Treasury play, with regard to the commissioning of an independent report from NERA? Was this done on the instructions of the Treasury, who announced the price freeze at a particularly challenging time for local households and business?

*When did Treasury receive a copy of the NERA report and was that too late to allow reference to be made to the challenges in the recent Budget?

What do you think about what has gone on here, is it mismanagement or simply a failure to appreciate the political risks that the MUA, The Treasury and CoMin were taking at a very challenging time?

Jason

[Happier diner]

3 minutes ago, Banker said:

But they’ve got no plant to reduce any costs with one of the main costs being the very large workforce with lots of highly paid managers 

That's a point. However it depends what you expectations are I suppose. Do you think that they could realistically make significant inroads into this cost. Staff don't come cheap. Without being involved in the operation its easy to make radical statements like this, and they could be true. They equally could be false. 

[Happier diner]

9 hours ago, 0bserver said:

I get that there was the price shock following Ukraine v Russia. But that now appears to be on the way back down with wholesale prices returning to almost pre-2022 levels. 

I have a suspicion that when Tim Johnstone was justifying these price increases with spiel about Russia, he wasn't being totally honest with us. 

Something has obviously happened to change the price. 

1) Has MUA made some duff forward purchases at higher prices than are expected? 

2) Are they just ramping up the prices to pay back their ~£50m losses? 

If it's the latter then there needs to be some form of control on that and MUA need to pay it back over time rather than using a sledgehammer to crack a nut. 

If it was deemed acceptable to limit Manx Gas profits, then it's only right to limit Manx Utilities 'profits'. There's a strong argument CURA should be regulating electricity prices. 

Once again we're smacked in the face by public sector incompetence when trying to operate in a commerical market. 

 

 

You clearly have not looked at the graph properly or understood it. Yes the massive spike is temporary but I don't know how you can come to the conclusion that gas prices are almost back to pre 22 levels when they are more than double still. 

Have a second look. 

[WTF]

2 minutes ago, Happier diner said:

You clearly have not looked at the graph properly or understood it. Yes the massive spike is temporary but I don't know how you can come to the conclusion that gas prices are almost back to pre 22 levels when they are more than double still. 

Have a second look. 

but double what it was isn't ten times what it was.

[Happier diner]

37 minutes ago, WTF said:

but double what it was isn't ten times what it was.

Has electricity gone up 10x?

[0bserver]

1 hour ago, Happier diner said:

You clearly have not looked at the graph properly or understood it. Yes the massive spike is temporary but I don't know how you can come to the conclusion that gas prices are almost back to pre 22 levels when they are more than double still. 

Have a second look. 

The key word is almost.

[Happier diner]

2 minutes ago, 0bserver said:

The key word is almost.

Since when was double the same as almost the same?