Isle of Man electricity prices could soar, chief minister warns

The electricity tariff cap is in place until March 31

Electricity prices on the Isle of Man are likely to spike when a six-month tariff cap is lifted, the chief minister has warned.

Prices for homes and businesses were capped by Manx Utilities (MU) after Tynwald backed the move in September.

But Alfred Cannan said he expected MU would soon have "no choice but to start raising prices substantially".

It was time to take steps to "bring reality back into pricing structures" when the cap ends on 31 March, he said.

Without the price cap the state-owned energy provider said electricity prices would have had to rise by at least 70% to cover the volatile wholesale cost of the gas used to fire the island's main power station in Pulrose.

"Painful year"

Politicians unanimously supported plans to freeze tariffs between October and March and provide a £26m loan to MU, to be taken from treasury reserves.

About 3,500 households on low-income benefits also received extra support payments to help pay energy bills last year.

Mr Cannan said although the government had made the right decision to shield customers over the winter months, without price increases the provider would be "storing up more problems for the future".

Increases during the warmer months of spring and summer would give residents a "better chance to adjust", he said.

However, he admitted that would not make it "any easier for really hard-pressed householders who are already feeling the financial squeeze through many other cost of living impacts".

"I can do little else than acknowledge that it's shaping up to be another painful year," he added.

Mr Cannan said MU should have confirmation of price increases within the next fortnight.

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