MEA announces a further 14.5% increase in electricity prices:
Island businesses are set to be squeezed further during this winter as the Manx Electricity Authority (MEA) announces a further 14.5 per cent increase in electricity prices. The revised tariffs come into force on September 1 this year and will mean businesses will now pay 11.64p per unit in peak times and 5.79p in off peak hours. Eddie Teare, chairman of the MEA, said the price rises were unavoidable due to the cost of wholesale gas, which the MEA is in the process of buying, to satisfy increased demand for electricity during the winter, generated by its gas-fired power station. He said: 'The cost of gas has moved against the consumer during the last couple of years. There was a time we could buy it for 12p a therm. Now it costs 83p a therm and was as high as £1.55 a therm at times last year. The company does hedge its gas purchases, but said the price hasn't been right to buy all its winter requirements in advance. Mr Teare added: 'We have committed to buy gas at a certain price, but that price hasn't been right to enable us to hedge all our winter requirements. The price should not change now for the rest of the winter, barring unforseen circumstances. This is not racketeering on the part of the MEA, I would love nothing more than to say we are not putting in a fuel cost adjustment, but we have to. 'We can't get any sweetheart deals with suppliers, we have to pay market prices, the same as anybody else, it all works on that principle.' Mr Teare admitted that Manx electricity prices had risen by 57 per cent since January 2003, but said other suppliers in the UK had raised prices by 80 per cent, with the lowest rise he was aware of in that time, being 49 per cent. Malcolm Macdonald, director of Smiths Aerospace and chairman of the Chamber of Commerce manufacturing committee, said the increases would be hard to swallow. He said: 'There is no way this is good news. A big issue for the sector in general, is that there is no way of passing that increase on, because most of our customers are looking for decreases and there is no way they will let us put prices up to cover that increase. It's difficult to swallow to say the least, but we are working with the MEA to try and find ways and means to reduce energy costs.' Dr Helmut Kessler, director of CVI Technical Optics, said the increases would add several thousand pounds to the firm's utility bills. He said: 'It's certainly going to be a substantial increase in costs. There is no way we can increase the price of our products by 14 per cent in the international market. We already pay several thousand pounds per month in utility bills and this will add a few thousand pounds a year to that bill.' He added: 'This will also increase inflation, so the cost of living goes up, therefore sooner or later you have to pay people a higher salary. These costs will manifest themselves in wage demands, there is a direct and an indirect impact.'
Stuart McCudden, president of the Chamber of Commerce, said: 'The recently announced price increases will impact on every business in the Isle of Man, either directly or indirectly. Most businesses are under pressure to contain or reduce prices and this increase will exacerbate the problem. The wider implications are that such increases will significantly increase the cost base of Manx businesses, making them less competitive. The Isle of Man is becoming an ever more expensive location to operate from and we need to have a strategy in place to contain these costs and remain competitive.' He added: 'Unfortunately, the current management of the MEA are having to deal with legacy issues and external commodities prices, both of which are beyond their control. Whilst there is a reluctant acceptance within the business community of these increases it does not make them any more palatable and certain businesses will encounter severe problems.' 16.8.06